Centre State Investment Agreement and Its Impression on Federalism in India

- Rakshith Ponnathpur.

Finance Minister Arun Jaitley, in this year’s Annual Budget, proposed for an agreement to be signed between the Union and the states to facilitate smooth implementation of Bilateral Investment Treaties (BITs) that India is set to enter into with the nations of the world, replacing the existing Bilateral Investment Protection and Promotion Agreements (BIPPAs). While signing this agreement is not mandatory, the perception that states which sign the agreement are better investment destinations than states which do not, will serve as an incentive for the states to sign the agreement.

The primary objective of the Centre-State Investment Agreement (CSIA), as the agreement is called, is to ensure fulfillment of state governments’ obligations under these bilateral treaties. Many a time, investors feel cheated because of a state’s failure to fulfill the promises made by the Union while signing the agreements. But signing the CSIA will bind the states to fulfill their commitments, bringing in some accountability into the whole business. CSIA is the first such move to actually involve the states in an area which has been exclusively Union's realm so far.

However, critics rightly argue that CSIA will have very little legal significance should investors approach international courts for arbitration. Irrespective of any agreements signed between the Government of India and its states, only the former can be held liable and accountable externally. This is because only the Union Government has the power to enter into treaties on behalf of the Indian Republic and once it has acceded to its terms, the international obligations assumed thereunder bind the entire country and not any individual states. CSIA can only facilitate shifting of blame for the embarrassment from the Union to the states internally.

The introduction of this agreement will also impact federalism in India, an area which clearly does not feature among the strong points of Indian polity. The states will not particularly be impressed with yet another provision which will enable Delhi to shift the blame to their capitals. Creation of a negative perception about a state’s investment ecosystem should it excuse itself from signing the agreement and Union's plans to inform investors beforehand about states which have not signed the CSIA will further make the states feel that the agreement is unfair on them, which is understandable since the states have little say in the provisions of the bilateral treaties itself in the first place.

A solution for this would be to institutionalize the involvement of state governments in the treaty-making process. The states will not find the CSIA unfair if they themselves are involved in formulation of the provisions of these treaties. The Chief Ministers of states can be made members of a consultative commission on treaty making (like the Governing Council of Niti Aayog) and this need not just be restricted to investment treaties, but can also be extended to other international agreements like the WTO treaty, Free Trade Agreements and Double Taxation Avoidance Agreements. Many of these agreements involve domains like agriculture which fall under the State List and directly impact the states, and it would only be logical on the part of Union Government to include actual stakeholders.

CSIA featured in discussions held at the recent Inter-State Council Meeting, with Tamil Nadu Chief Minister Jayalalitha welcoming the Union's move to include states in the treaty-making process and also raising some of her reservations about the draft CSIA agreement. There is a possibility that the Union might try to pass on some financial burdens it might suffer from penalties under already existing bilateral agreements, which she feels is unfair since states are neither party nor aware of the provisions of earlier treaties. She also expressed her concern that the Union deducting such dues from the amount it transfers to states, would impact the implementation of schemes of state governments, and called for the deletion of the provision which enables the Union Government to resort to this practice.

Centre State Investment Agreement will be a commendable and an affirmative step, which will help in bringing some much needed order, accountability and cooperation between the Union and the states in smooth implementation of bilateral treaties, provided it makes the Union and the states part of the holistic treatyformulation process. Otherwise, it may well go on to be yet another provision which makes states liable to the shortcomings of provisions they were not even aware of, in the first place.

This is a golden opportunity for the Union Government to show it means no nonsense when it talks of cooperative federalism, and include states as equally responsible stakeholders in foreign investment.

Why Should Delhi Decide on Jallikattu?

The last couple of weeks has seen some passionate debate on Jallikattu and other forms of traditional animal sport in India, including the Kambala practiced in Karnataka. The row began with the announcement by the Union Environment Minister Prakash Javadekar that such traditional practices may be allowed to continue from the beginning of the year, at the same time making certain that animals are not subjected to any form of cruelty. After close to two weeks of swithering to make a decision, the Union Government has finally given a go-ahead, even as the Tamil Nadu Government has approached the Supreme Court for a review of the ban. 

Many animal rights activists and their supporters have lashed out at the Union Government for its decision to lift the ban, despite the Supreme Court order prohibiting bull fights and other forms of animal sport. But there has also been strong support to lift the ban from many other quarters, especially those in support of continuing the traditions

Earlier in 2014, the Supreme Court, in what was termed as a landmark judgement, had ruled that animals such as bulls could not be used for bull fights, races, and other such performances. This meant that Kambala of Karnataka, Jallikattu of Tamila Nadu, bull races held in Maharashtra and elsewhere had to be stopped. What is interesting is that the Supreme Court order also quashed the Tamil Nadu Regulation of Jallikattu Act, a state act that permitted Jallikattu.

Are these sports really cruel on the animals? Do they violate animal rights? We will not get into these questions here. These questions pertain to the subject of ethics, which are not always universal. Different cultures and societies have different standards and interpretation of the subject, and what entails ethical behaviour varies. Laws, framed based on the foundation of ethics, as a result, also vary across societies, cultures, and nations. 

So, the question we want to address here, is not if Jallikattu is morally right or wrong. The question is - who should make the pertinent laws and who should take these decisions?

The Supreme Court order was based on the provisions of The Prevention of Cruelty to Animals Act, which applies to the whole of India, excepting the state of Jammu and Kashmir. With so many diverse ethnicities and societies across the Union of India, it is hard to understand as to why a matter such as animal rights that can be so subjective and at the same time vehemently contentious is governed by a single overbearing law. 

It is impossible to assimilate all the various and often conflicting interpretation of ethical treatment of animals into a single homogeneous act or legislation, and an overbearing law such as this will inevitably impose one cultural interpretation of the subject, on the rest of the states and its peoples. With respect to people, the states being the more proximate government entities are more competent and better placed to legislate and take decisions on such matter. The entities that make a law, interpret it or take decisions based on a law, should be as close to the people or the society in question, as possible.

In the case of Jallikattu, the Union Government that enacted the legislation, and the courts that interpreted it, ordering the sport to be banned and quashing an act passed by the Tamil Nadu government, are much far removed from the Tamil people. Hence the decision to hold such events and festivities should be left to the state governments and the communities involved, rather than laws and orders coming down all the way up from the Delhi establishment.

The media, as usual, has made it a ‘national’ debate. With mounting pressure on the Union Government to permit Jallikattu before the beginning of Pongal festivities, it has now come up with an alteration to the 2011 notification by the Ministry of Environment and Forests by granting exemption to such sport. As per reports, the Animal Welfare Board of India may challenge the order in the Supreme Court. Whether the ultimate outcome will favour the animal rights activists or those in support of the tradition is a different matter, but it still leaves us to the mercy of the Union Government’s laws and its interpreters.

Eventually, the law, whether in its nature favours the present case for Jallikattu or otherwise, should be discussed and enacted by the Tamil Nadu legislature. Similaly, a law on Kambala, irrespective of whether it approves the practice favouring tradition or bans it considering arguments of fair treatment of animals, should be tabled, debated and then approved or rejected in the houses of the Karnataka legislature. A single law for the entire Union is not only unfair and insensitive to various peoples and their accepted standards and societal norms, it is also quite impractical.

(Image source: wikimedia.org)

#TamilInHighCourt: A Demand for Democratic Rights

On Wednesday last week (October 7 2015), a protest was organized at Parrys Corner in Chennai demanding the use of Tamil in the Madras High Court. As the protest began at about 3 PM, twitterati too expressed its support to the cause by tweeting with the hash tag #TamilInHighCourt. The hash tag was trending in the afternoon for a while, not only in Chennai, but also notably in Bengaluru. Many Kannada speakers expressed their support to the protest via twitter.

Earlier, the issue caught wide attention when lawyers demanding the use of Tamil in the High Court barged into court rooms stalling proceedings, leading to the arrest of several of them. While the Chief Justice of India chided the lawyers for their method of protest, Justice Markadey Katju, former Supreme Court Judge backed the demand of agitating lawyers and asked Jayalalitha, the Chief Minister, to make use of the provisions of article 348(2) of the Constitution to permit the use of Tamil in the High Court.

The demand of the advocates to use Tamil is legitimate and fair. In fact, all court work in Tamil Nadu should have long been conducted in Tamil. Similarly, every High Court in the Indian Union should conduct all its official work and transactions in the official language of the respective state. Unfortunately, the Constitution does not permit this!

Yes, this is true. While a lot is being said about the constitutional provisions for the use of the states’ official languages in the respective high courts, it is to be noted that these provisions actually permit the use of the state language only in proceedings. There is no binding on the courts to use the state language in order, decrees, judgements or any other internal work. Here is the full text of article 348(2):

(2) Notwithstanding anything in sub clause (a) of clause (1), the Governor of a State may, with the previous consent of the President, authorise the use of the Hindi language, or any other language used for any official purposes of the State, in proceedings in the High Court having its principal seat in that State: Provided that nothing in this clause shall apply to any judgment, decree or order passed or made by such High Court

Conducting court proceedings in the state language is imperative, so is the use of the state language in all internal work of the courts. Courts are public institutions of paramount significance. And being public institutions they should function in the language of the public. People should have the right to use their language in courts, and no government should restrict such use or force the use of another language. 

This view is also supported by UNESCO’s Universal Declaration of Linguistic Rights. With respect to use of people’s language in courts, article 20(1) of the declaration says:

“Everyone has the right to use the language historically spoken in a territory, both orally and in writing, in the Courts of Justice located within that territory. The Courts of Justice must use the language specific to the territory in their internal actions and, if on account of the legal system in force within the state, the proceedings continue elsewhere, the use of the original language must be maintained.”

What happens if a case moves to the Supreme Court? While the Constitution provides for the use the state language atleast in the proceedings of the High Courts no such provision is available in the case of the Supreme Court. People without the knowledge of English are severely disadvantaged in India’s justice system.

Coming back to the high courts, apart from limiting the scope for the use of state’s official language, the provisions of article 348(2) also lead to a few, more fundamental questions. 

What is the need for the Governor to authorize or the President to consent the use of a language in a high court? Should not the use of the state’s official language in courts be made mandatory by default? On what basis is the use of state’s language approved or denied? Why is the Governor, an appointed nominal head, and not a democratically elected representative like the chief minister, given the power of authority to authorize the use of a language? 

Whatever may be the answers, there can be no justification based on principles of democracy.

Another cause of concern is the provision to authorize the use of Hindi in high courts of non-Hindi states. There is nothing that prevents the Governor, who is neither an elected representative nor answerable to the people of the state to authorize the use of Hindi in, let’s say, Karnataka. No democratic state would permit such forceful imposition of a foreign or a non-native language on its people. But unfortunately, the laws of the Indian Union do.

Also, Hindi states like Madhya Pradesh, Rajasthan, Bihar and Uttar Pradesh have already been permitted to use Hindi in the respective high courts, while no other state high court is permitted the use of the state’s official language yet. The bias of the Indian Union towards Hindi and its speakers, and the resulting discrimination against the non-Hindi peoples, is well known and we have explored this subject in several earlier articles in Karnatique. So, even in cases where the law permits the use of non-Hindi languages on par with Hindi, they are either long denied or ignored.

It is evident that the questions and concerns raised above highlight the lack of basic democratic tenets in some of the provisions of the Constitution. To be just and fair to all the diverse linguistic communities of India appropriate constitutional amendments are required so that the principles of democracy are induced into the functioning of courts and other public institutions.

It is good to see the lawyers of Tamil Nadu come out in protest demanding their linguistic rights. Other linguistic communities, majorly Kannada, Marathi and Bengali speakers, have expressed solidarity with the lawyers of Tamil Nadu. Such external support goes far in lending strength to such demands. I hope other linguistic communities too demand the use of their language in their state high courts. And as people of every state demand the use of their language in courts, it is important that they support each other.

But this should not be the end. This should be the beginning. These protests have targeted to implement whatever is permissible within the circumference of the law. But as we saw in this article, the law itself possesses some fundamental flaws with respect to democracy and linguistic rights of non-Hindi peoples. Unless these flaws are fixed, justice and fairness will remain a far-fetched dream. Hence, in the long-term, all citizens of India should unite to advocate linguistic equality in the Indian Union with the ultimate aim of eliminating all discriminatory laws and provisions.