Exciting Business Opportunities in Jordan

Francisco A. Laguna & Wojciech Kornacki

Jordan has a stable government, strategic location, and one of the most open economies in the region.  Jordan is an active trading partner with the European Union and the United States, and it has a well-educated and skilled labor force.  In addition, English is widely spoken, and Jordan is safe and very popular with tourists and students.  These attributes make Jordan one of the best places for foreign direct investment in the Middle East.

Country Background

Jordan is located between Israel, Palestinian Authority, Saudi Arabia and Iraq.  Its population is 8,117,564.  Jordan’s economy is one of the smallest in the region, but it is also one of the fastest growing.  While other developing economies in the region are declining, Jordan’s economy is forecasted to grow.

Zahran district in the capital city of Amman.  Courtesy of http:// http://en.wikipedia.org

Zahran district in the capital city of Amman. Courtesy of http:// http://en.wikipedia.org

International Trade

Jordan is very pro international trade.  The largest exporters to Jordan include the EU, Saudi Arabia, China and the United States.  Since Jordan has signed a Free Trade Agreement with the United States, bilateral trade between both countries has surged ten-fold in the last 13 years.

Jordan’s Priority Sectors for Economic Development


Jordan spends approximately 15 % or US$  5.4 billion of its Gross Domestic Product on energy.  To increase its energy independence, Jordan is likely to invest in energy-efficient projects, renewable energy, rooftop solar panels and sun-powered water heaters.  The EU and Jordan are going to invest US$ 100 million in solar energy.  This sector of Jordan’s economy offers significant potential growth in the future.  The investment into the energy market is also likely to benefit many refugees which are currently living in Jordan.

Information and Communications Technology (ICT):

The information and communications technology sector is one of the best sectors to invest for US companies.  The number of mobile subscribers in Jordan is expected to grow.  It is estimated that on average, the mobile sector grows 10% annually.  While weak consumer purchasing power could be a concern, it has not stopped the market from growing.

A solar powered charging station in King Hussein Business Park allows a driver to recharge his / her car.

A solar powered charging station in King Hussein Business Park allows a driver to recharge his / her car.

Defense and Security:

Jordan is in the process of rearming its armed forces in order to better support its regional missions.  This means significant spending to obtain new military equipment and improve capacity.  Currently, Jordan possesses a highly trained but rather small military force.  To highlight its Western ties and military needs, Jordan is a host to the XI Special Operations Forces Exhibition and Conference which will be held in May 2016.

Other industry sectors that also receive significant attention are healthcare, education and business services.  If you are interested in learning more about future business opportunities in Iran and how to increase your chances of harnessing them, contact TransLegal or call 703-566-9427.


Cyber Security is the New Business Opportunity

Francisco A. Laguna & Wojciech Kornacki

Recent massive and coordinated cyber-attacks on governments and businesses alike reveal the urgent need for global cyber security.  As digital transformation and technical advances have changed the way we communicate and do business, cyber threats and cyber-attacks have become more common.  In order to respond to the ever increasing demand for cyber security, in the next several decades billions of dollars will be spent around the world to combat the new and emerging cyber threats and prevent attacks.  This creates new business opportunities for information technology entrepreneurs.

Air Force First Lieutenant responds to potential threats in the Incident Response Team Net Forensics Lab. Members of the team have two minutes to evaluate incoming threats. (USAF photo)

Air Force First Lieutenant responds to potential threats in the Incident Response Team Net Forensics Lab. Members of the team have two minutes to evaluate incoming threats. (USAF photo)

What is Cyber Security?

Cyber security is the activity or process, ability or capability, or state whereby information and communications systems and the information contained therein are protected from and / or defended against damage, unauthorized use or modification, or exploitation.

Chances are that most of us received an email from an unknown source asking us for personal information, and we did not know that we were under a cyber-attack.  However, this is actually called “phishing”, and phishing is considered a form of a cyber-attack.  Other forms of cyber-attacks include:

  • “pharming”: fraudulently redirecting a website’s traffic to another, fake website
  • “malware”: software that performs unauthorized functions without your knowledge
  • “Trojan horse”: software that appears to have a useful function, but also it has hidden and potentially malicious functions, or
  • “spyware”: software that enables a user to obtain covert information about another’s computer activities by transmitting data covertly.

The particular challenge with cyber security is that most governments and businesses are completely unprepared for these new types of constantly evolving attacks and threats.  In addition, some businesses and governments are not even aware that they are being attacked.  This means that they may lose critical operational information, trade secrets and business information, without even knowing.

Domestic Cyber Security Opportunities 

The U.S. Government requested US$ 19 Billion to improve cyber security defenses in the 2017 budget.  In addition, the U.S. Department of Defense plans on spending an additional US$ 5 Billion on cyber security.  Most likely a significant portion of these amounts will be awarded to private businesses specializing in cyber security, and many of the large defense contractors are rapidly developing their cyber security capabilities.  However, even the biggest cyber security contractors will require a number of subcontractors to meet the demand.

While the U.S. Government is attempting to counter cyber threats for itself, it cannot protect private businesses from similar attacks.  It is likely that private businesses will also have to improve their cyber security.  Thus, many private businesses will have to develop their own cyber-attack detection and prevention safeguards and protocols.


Tallinn, Estonia. In the past, Estonia has been a subject to multiple well-coordinated cyber-attacks. The attacks have taken down many official and private websites including webpages of the Estonian parliament, and many Estonian newspapers. The attacks coincided with the heavy Russian criticism over the removal of the Bronze Soldier Statute from Tallinn. Courtesy of http:// http://en.wikipedia.org

International Cyber Security Opportunities

The cyber security market is expected to grow from US$ 77 Billion in 2015 to US$ 170 Billion by 2020.  While North America and Europe greatly contribute to the growth of the international cyber security market, the Asian and South East Asian markets are quickly developing.

Similarly, many Arab governments have experienced cyber-attacks in the energy sector.  Increasing their defenses will result in spending of approximately US$ 9.5 Billion by 2019.

Cyber Security Stocks are Increasing in Value

Many companies that specialize in cyber security are seeing their stocks increase.  This rise is largely due to the perception that cyber-attacks benefit private cyber security companies.  Close analysis of the ISE Cyber Security Index reveals that this index has gone up by 22% in 2015 alone.  There seems to be a correlation between the number of cyber-attacks and the rise of stocks of companies specializing in cyber security.

Cyber Security Insurance gains Importance

Cyber security insurance has also seen rapid growth.  Many insurance companies have begun to offer it to private business.  These new policies also cover third-party loss resulting from the cyber-attack, all costs associated with the cyber-attack, extortion, and on-line trade secret protection.

Cyber security is here to stay.  The domestic and international markets show tremendous opportunities for growth.  If you are interested in learning more about future business opportunities involving cyber security, contact TransLegal or call 703-566-9427.

US Customs Reauthorization Bill Signed into Law

Francisco A. Laguna

On February 24, 2016, President Obama signed the Trade Facilitation and Trade Enforcement Act of 2015, H.R. 644 (Customs Reauthorization Bill), into law.

The law, which we summarized over the past two weeks, contains the most far reaching set of changes since the Customs Modernization (MOD) Act, including significant changes to the operations and programs of US Customs and Border Protection (CBP), new provisions for combating evasion of the antidumping (AD) and countervailing duty (CVD) laws, and the inclusion of brand new measures to protect intellectual property rights (IPR).

A CBP Officer directs a truck with a seaport container to an inspection area at a port.  www.cbp.gov

A CBP Officer directs a truck with a seaport container to an inspection area at a port. http://www.cbp.gov

CBP officials have indicated the agency will be busy developing and implementing regulations for the law. Some key dates laid out in the law include:

Section 901 – De Minimis Level

This section amends 19 U.S.C. § 1321(a)(2)(C) to raise the de minimis threshold from $200 to $800. This amendment shall apply to merchandise imported or withdrawn from the warehouse for consumption on or after March 10, 2016.

Section 304 – Copyright Enforcement while Application Pending

Section 304 calls for a process to enforce copyright protection for marks after the filing of a registration application, but before the application has been approved and the registration is in full force and effect. These steps are to take effect by August 2016.

US Commerce Department.  www.commerce.govSection 421 – Enforcement of AD/CVD Orders

The Department of Commerce has been authorized to administratively investigate AD/CVD evasion and requires CBP to collect or preserve for collection AD/CVD duties owed on evading imports. These amendments are effective August 2016. Regulations to put the changes into effect are also called for by August 2016.

Section 303 – IPR Enforcement – Circumvention Devices

Section 303(a) expands CBP’s seizure and forfeiture authority to explicitly include unlawful circumvention devices, as defined under 17 U.S.C. § 1201(a)(2) or (b)(1).  CBP has to prescribe regulations implementing this process by February 2017.

Section 116 – Importer of Record (“Known Importer”) Program

Section 116(b) requires the Commissioner to submit a report to Congress no later than August 2016 containing recommendations for determining the most timely and effective way to require foreign nationals to provide customs brokers with appropriate and accurate information (comparable to that which is required of United States nationals concerning the identity, address and other related information), and for establishing a system for customs brokers to review information maintained by relevant Federal agencies for purposes of verifying the identities of importers, including nonresident importers, seeking to import merchandise into the United States.

As with all landmark legislation, the regulatory process is where the details will be provided.  While regulations may not be issued immediately, importers may still feel the effects of this law sooner rather than later. For example, CBP has been taking steps to increase enforcement of AD/CVD and IPR provisions in anticipation of the passage of the law using existing processes. Importers are likely to see the effects of CBP enforcement under current processes.

Contact TransLegal with your questions concerning the Trade Facilitation and Enforcement Act of 2015 / Customs Reorganization Bill.

US Passes Trade Facilitation and Enforcement Act

Francisco A. Laguna

 This week, we continue our summary of the changes to US trade law to be implemented by Trade Facilitation and Enforcement Act of 2015 (2015 Trade Enforcement Act) which passed earlier this month by the Senate.

Small Business and State Trade Promotion Programs (Title V)

Title V contains various provisions aimed at aiding small businesses in export promotion activities. For example, it requires further outreach to small businesses on the potential impact of new trade agreements. It also establishes a grant program to states to carry out programs such as foreign trade missions, trade shows, and other forms of marketing and training for small businesses. States will undoubtedly take advantage of this program, and smaller companies should look into it if interested in international sales.

Other Enforcement Measures (Title VI)

Title VI establishes a Trade Enforcement Trust Fund to be used by the United States Trade Representative (USTR) and other agencies to enforce US trade agreements and trade rights under the World Trade Organization (WTO) and US free trade agreements (FTAs). The trust fund could also be used for trade capacity building efforts.

By Kevin McCoy, CC BY-SA 2.0

By Kevin McCoy, CC BY-SA 2.0

Title VI also requires US Customs and Border Protection (CBP) and Immigration and Citizenship Enforcement (ICE) to institute certain measures to stop illegal honey transshipment; and requires that the two agencies train and employ sufficient personnel to detect, identify, and seize cultural property, archeological or ethnological materials, and other fish, wildlife or plants that violate US laws. Title VI also codifies the establishment of the Interagency Trade Enforcement Center (ITEC).

Currency Manipulation (Title VII)

Title VII addresses issues regarding currency undervaluation, a main thorn in the recent trade promotion efforts. Among other things, Title VII:

  • requires the International Trade Administration (ITA) to investigate alleged currency undervaluation in countervailing and antidumping duty investigations and provides a method for calculating the amount of undervaluation;
  • requires the administration to actively engage with those countries found to manipulate exchange rates in order to urge implementation of monetary policies that would address the issue;
  • sets criteria on what constitutes currency manipulation similar to existing International Monetary Fund standards;
  • creates an advisory committee for the US Treasury Department on currency issues; and
  • directs Treasury to take certain steps if it believes currency manipulation has occurred.
By Project Manhattan - Own work, CC BY-SA 3.0,

By Project Manhattan – Own work, CC BY-SA 3.0

The most contentious dispute involved competing proposals on currency manipulation that were not enacted in the final legislation, with the original Senate bill including a strict provision that would have enabled the US Department of Commerce to treat undervalued foreign currency as a prohibited government subsidy in countervailing duty investigations.



Renewal and Expansion of CBP Operations/Programs (Title VIII)

Title VIII of the Act consists of two parts. First is the US Customs and Border Protection Authorization Act, which formally establishes the US Customs and Border Protection, along with operational offices within CBP and the positions of the Commissioner and Deputy Commissioner. Although the Act provides for a number of name changes to the internal offices within CBP and structure of their leadership, it is largely a formal codification of the existing structure and role of the agency. In fact, Section 802 specifically affirms that CBP shall continue to carry out the functions, missions, duties, and authorities previously vested within CBP prior to the passage of this legislation, and all rules regulations and policies issued by CBP remain in effect.

The second part of Title VIII is the Preclearance Authorization Act of 2015, which authorizes CBP to operate preclearance locations in foreign countries, provided an aviation security preclearance agreement is in effect. The provisions of Preclearance Authorization Act of 2015:

  • set forth various reporting requirements to Congress prior to entering into a preclearance agreement with a foreign country to enable Congress to comprehensively assess the appropriateness of commencing the preclearance operations and monitor the resources allocated to preclearance locations;
  • incorporate certain security measures, including requiring Transportation Safety Administration (TSA) to prescreen passengers and their baggage if the foreign government has not maintained security standards comparable to the US, and prohibiting preclearance locations in foreign countries that do not routinely provide stolen passport information to INTERPOL or the United States; and
  • allow CBP to enter into cost-sharing agreements with the airport authorities (where preclearance locations are established) in foreign countries for preclearance operations costs, immigration services, and agricultural inspection services, enabling CBP to receive payments in advance of the incurrence of the costs or on a reimbursable basis.

Miscellaneous (Title IX)

Title IX covers a broad array of miscellaneous provisions, though “miscellaneous” may be a misleading description as some of the provisions were the most sought after changes advocated by the trade community. Among the changes provided for in this Title are the following:

  • By Henryvb at German Wikipedia, CC BY-SA 3.0

    By Henryvb at German Wikipedia, CC BY-SA 3.0

    raises the amount allowed to be entered on a “manifest entry” as de minimis from $200 – $800 (Sec. 901);

  • increases the time required for consultations with Congress on certain administrative actions involving international trade and requiring certain minimum time periods for consulting with business on such actions (Sec. 902);
  • enhances certain provisions of Chapter 98 regarding goods returned to the United States to both enlarge the scope and make them more user friendly (Sec. 904);
  • removes the entry requirement for certain bulk cargo residue returning to the United States in Instruments of International Traffic after export from the US (Sec. 905);
  • provides for numerous changes to the current duty drawback statute, including requiring certain substitution drawback determinations to be based on classification in the same 8-digit tariff heading, amending the requirements for establishing “proof of export” and certain time periods for filing claims, and providing for joint liability for the claimant and the importer (Sec. 906);
  • makes technical corrections to certain tariff classifications for recreational performance outerwear and to Additional US Note for Chapter 64 relating to certain protective active footwear (Sec. 912 and 913);
  • creates a trade preference for Nepal similar to African Growth and Opportunity Act (Sec. 915);
  • Allows for the implementation of Aisa-Pacific Economic Cooperation Agreement providing for duty reductions on certain environmental goods (Sec. 916);
  • adopts specific country of origin marking requirement for certain steel castings (Sec. 917);
  • extends the period for which certain customs fees may be charged and the rate charged (Sec. 920);
  • increases the penalty for the failure to file certain tax returns (Sec. 921); and
  • imposes a moratorium on certain internet taxes being imposed by the States or other localities (Sec. 922).

Contact TransLegal with your questions concerning the Trade Facilitation and Enforcement Act of 2015.

US Passes Trade Facilitation and Enforcement Act

Francisco A. Laguna

After more than two years of debate, last week, the United States Senate passed the Trade Facilitation and Enforcement Act of 2015 (2015 Trade Enforcement Act). The legislation contains the most far reaching set of changes since the Customs Modernization (MOD) Act. Of particular significance is the inclusion of brand new measures to protect intellectual property rights and to combat antidumping and countervailing duty violations, including a mandate that Customs and Border Protection (CBP) establish its own program for these purposes.

By U.S. Customs and Border Patrol

By U.S. Customs and Border Patrol

Surprisingly, the major provisions of the Act received almost universal support from the trade community. The House had passed the bill last year, but it got bogged down in the Senate because of an unrelated internet sales tax provision. While the provision remains in the final version of the law passed by the Senate, the Senate leadership in return has agreed to take up new Internet sales tax legislation this year. President Obama is anticipated to sign the legislation into law this week.

The 2015 Trade Enforcement Act makes some significant changes to the operations and programs of CBP, adds new provisions to the antidumping and countervailing duty laws, including new procedures to combat evasion of AD/CVD orders, and revamps the drawback laws.

This week, we begin a short summary of the more significant changes. We will continue our summary next week.

Trade Facilitation and Trade Enforcement (Title I)

Title I establishes a various trade facilitation and enforcement programs. It:

By WestportWiki - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=34507625

By WestportWiki – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=34507625

  • requires CBP to work with the private sector and other federal agencies to ensure that all CBP partnership programs provide meaningful trade benefits to program participants;
  • authorizes CBP programs, including customs modernization efforts such as the Automated Commercial Environment (ACE) and the International Trade Data System (ITDS), also known as the “Single Window” approach to collecting trade data;
  • formalizes the Commercial Customs Advisory Committee (COAC) and the Centers of Excellence and Expertise (CEEs);
  • creates a National Targeting Center (NTC) within the Office of Field Operations that will gather data and assess risk on each of CBP’s Priority Trade Issues (PTIs): 1) agricultural programs; 2) antidumping and countervailing duties; 3) import safety; 4) intellectual property rights; 5) revenue; 6) textiles and wearing apparel; and 7) trade agreements and preference programs;
  • requires CBP to develop criteria for assigning importer-of-record identification numbers; and
  • establishes a new importer program that directs CBP to adjust bond amounts for new importers based on the level of risk assessed by CBP for revenue protection. CBP is required to develop risk-based guidelines and procedures to ensure increased oversight of imported products of new importers, including new non-resident importers.

Import Health and Safety (Title II)

Title II creates an interagency import safety working group, chaired by the Secretary of Homeland Security. The group is responsible for developing a joint import safety rapid response plan to establish protocols and practices that CBP, in conjunction with other federal, state and local authorities, must use when responding to cargo that poses a threat to the health or safety of US consumers. Title II also requires joint exercises with these entities and training for CBP port personnel in enforcement of import health and safety laws.

Import-Related Protection of Intellectual Property Rights (Title III)

Enforcement of intellectual property rights remains one of CBP’s highest priorities. Accordingly, the provisions of Title III will be one of the most scrutinized areas of the 2015 Trade Enforcement Act. Specifically, Title III:

  • authorizes and directs CBP to share information with rights holders so that they could help to quickly identify whether a product entering the United States is in violation of a copyright or trademark. Rights holders could even examine and test the merchandise;
  • authorizes CBP to seize merchandise if it is found to be in circumvention of IPR laws;
  • requires CBP to notify an injured right holder if they are included on an annually revised, CBP-maintained list (i.e., if rights are recorded with CBP);
  • establishes a National Intellectual Property Rights Coordination Center within CBP to coordinate actions with other agencies and conduct outreach to importers; and
  • calls for an increase in IPR enforcement personnel.

Enforcement of Trade Remedy Laws (Title IV)

The Act adds significant new provisions to deter evasion of antidumping (AD) and countervailing duty (CVD) orders. Directed largely at steel imports, the new provisions, called the “Enforce and Protect Act of 2015” are likely to be invoked frequently by US producers combating imports under an AD or CVD order.

U.S. Customhouse, 555 Battery St, San Francisco

U.S. Customhouse, 555 Battery St, San Francisco

In particular, the new law establishes a whole new procedure within CBP which allows US producers or wholesalers, unions, foreign manufacturers or exporters, or trade associations of a covered product to file an allegation that a party has entered covered merchandise through evasion. Importers beware!  As soon as CBP can get this procedure up and running, it is likely to be very active.

Once a complaint is filed and accepted, CBP is required to conduct a formal investigationwith specific deadlines.

CBP can issue questionnaires just like in a trade remedy cases to importers and foreign producers.

Failure to respond will result in “adverse inferences” regarding the alleged evasion.

If evasion is found, CBP can suspend liquidation, order payment of duties owed, and pursue an enforcement action.

The new anti-evasion measures of Title IV also include various directives for CBP to target and investigate potential evasion of AD and CVD orders, including setting up a new Trade Remedy Law Enforcement Division to more aggressively investigate possible evasion cases, and conducting aggressive auditing of firms at high risk. Failure to cooperate in an investigation by an importer or foreign exporter may result in a finding of evasion.

Contact TransLegal with your questions concerning the Trade Facilitation and Enforcement Act of 2015.

India Legislative Updates — Reorganization of the Judiciary

Francisco A. Laguna

Today, we continue our India Update, focusing on the recent reorganization of the judiciary.  The reforms included in The Commercial Courts Commercial Division & Commercial Appellate Division of High Courts Act, 2015 (Act) form part of India’s efforts to ease doing business in the country, build confidence and attract foreign direct investment.

Jurisdiction in Arbitration Proceedings

All matters currently pending under Part I of the Arbitration & Conciliation Act, 1996 (Arbitration Act) will be transferred to the Commercial Courts or Divisions.

Golden Temple, Amritsar, by Rakshakdua – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=21132680

International commercial arbitrations, defined as controversies involving at least one non-Indian party with proceedings in India, will be under the jurisdiction of the Commercial Divisions of the High Courts.  The one exception is applications for the designation of arbitrators, which are currently the responsibility of the Supreme Court.

This has created a conflict between the Act, which prescribes that arbitration proceedings would be heard by the Commercial Appellate Divisions, and the Arbitration Act, including the fact that the Commercial Divisions of the Mumbai High Court do not include arbitration proceedings within their jurisdiction.  This is expected to be modified in the near future.

Appellate Jurisdiction

Decisions issued by the Commercial Courts and Divisions are no longer subject to appellate review by the High Courts.  These appeals will be heard, exclusively, by the Commercial Appellate Division of the High Court that heard the case in first instance.  Appeals must be filed within 60 days of the date of the order, and more importantly from the foreign investor perspective, must be decided within a period of 6 months.  The time it takes for appeals to be heard and resolved has been a major criticism of foreign companies doing business in India.

Procedure & Timelines

To address concerns of the time required to litigate in the Indian courts, the Code of Civil Procedure has been revised to include the following provisions, some taken directly from procedures followed by US courts:

  • Parties may move for summary judgment solely on the written pleadings.
  • Every pleading must be attested by an affidavit; otherwise, it cannot be relied upon.

In addition, the following deadlines have been incorporated into the Code:

  • Written statements must be filed within 120 days of the date of service of process.
  • Document Inspection must be completed within 30 days of filing of the written statement.
  • Initial case management hearing will be within 4 weeks from admission or denial of documents by all parties.
  • Written arguments must be submitted within 4 weeks of commencement of oral arguments. The court has the discretion to permit revised written arguments to be filed within 1 week of oral arguments.
  • Oral arguments must be concluded within 6 months from the first case management hearing.
  • The Commercial Court or Division must issue its ruling within 90 days of the conclusion of oral arguments.

These deadlines, if indeed followed and enforced, will greatly streamline court proceedings.

Pending Disputes

The Act clearly stipulates that pending commercial disputes with the required Specified Value, including those pending under the Arbitration Act, will be transferred to the Commercial Courts or Divisions.  Not surprisingly, however, the Delhi High Court has adopted another position, ruling that the civil courts will continue to retain jurisdiction of cases where hearings have concluded and judgment is reserved.

From the practical perspective, Commercial Courts have yet to be established. Only the Delhi and Bombay High Courts have Commercial Divisions and Commercial Appellate Divisions. Moreover, the establishment of new divisions or courts does not resolve the fact that the judiciary is over-burdened.

Contact TransLegal with your questions concerning court and arbitration proceedings in India.

India Legislative Updates — Reorganization of the Judiciary

Francisco A. Laguna

 Today, we continue our India update, focusing on the recent reorganization of the judiciary.

On 31 December 2015, President Pranab Mukherjee approved The Commercial Courts Commercial Division & Commercial Appellate Division of High Courts Act, 2015 (Act), which is effective as of 23 October 2015.  The Act is yet another step in India’s efforts to ease doing business in the country, build confidence and attract foreign direct investment.  It will certainly impact both ongoing and future litigation.

Classes of Courts under the Act

The Act establishes three classes of courts.


"High Court of Karnataka, Bangalore MMK" by Muhammad Mahdi Karim (www.micro2macro.net)Facebook Youtube/ Augustus Binu - Own work. Licensed under GFDL 1.2 via Wikimedia Commons

“High Court of Karnataka, Bangalore MMK” by Muhammad Mahdi Karim (www.micro2macro.net)Facebook Youtube/ Augustus Binu – Own work. Licensed under GFDL 1.2 via Wikimedia Commons

  • First, the existing High Courts of original jurisdiction (Mumbai, Kolkata, Chennai, Delhi and Karnataka) must set up a Commercial Division.
  • Second, every High Court will have to establish a Commercial Appellate Division.
  • Third, state governments in the remaining states must establish Commercial Courts at the district level.

Threshold Monetary Jurisdiction

The Commercial Courts and Divisions will have jurisdiction over all commercial disputes in excess of INR 1,00,00,000 (~ US$ 150,900) or such higher amount dictated by the Central Government (“Specified Value”).

Chennai:  Madras High Court Photo Credit: Milei.vencel via Wikimedia Commons

Chennai: Madras High Court
Photo Credit: Milei.vencel via Wikimedia Commons

Section 12 of the Act provides how to calculate the value of the claim.  Plaintiffs and counsel should pay careful attention to the valuation provisions in Section 12 to avoid possible allegations of lack of jurisdictions.

Subject Matter Jurisdiction

The Commercial Courts and Divisions will have subject matter jurisdiction over commercial disputes, defined as those arising out of, or related to:

  • ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
  • export or import of merchandise or services;
  • issues relating to admiralty and maritime law;
  • transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing thereof;
  • carriage of goods;
  • construction and infrastructure contracts, including tenders;
  • agreements relating to immovable property used exclusively in trade or commerce;
  • franchising agreements;
  • distribution and licensing agreements;
  • management and consultancy agreements;


"High Court - Oval Maidan" in Mumbai, by Anunandusg - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons

“High Court – Oval Maidan” in Mumbai, by Anunandusg – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons

  • joint venture agreements;
  • shareholders agreements;
  • subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
  • mercantile agency and mercantile usage;
  • partnership agreements;
  • technology development agreements;
  • intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
  • agreements for sale of goods or provision of services;
  • exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
  • insurance and re-insurance;
  • contracts of agency relating to any of the above; and
  • such other commercial disputes as may be notified by the Central Government. Further, a commercial dispute includes a counter-claim filed in a suit if it is a commercial dispute of Specified Value.

Clearly, many of topics now under the purview of the commercial courts are of specific interest to investors.

Next week, we will continue the discussion of jurisdiction over arbitration proceedings and other procedural matter.

TransLegal assists its clients understand and maneuver the often difficult rules and regulations that characterize the Indian legal and regulatory system.  Call us with any questions you may have about doing business in India.


India Legislative Updates: The Insurance Sector

Francisco A. Laguna

 This week, TransLegal continues its 2015 series on recent legislative changes in India.  In light of Prime Minister Narendra Modi’s recent visit to Pakistan on the occasion of PM Nawaz Sharif’s birthday, this series is even more appropriate.  Today, we focus on issues related to ownership and control of insurance companies.

"IRDAI" by Swapna J BcomD - Own work. Licensed under CC BY-SA 4.0 via Wikimedia Commons

“IRDAI” by Swapna J BcomD – Own work. Licensed under CC BY-SA 4.0 via Wikimedia Commons

In April 2015, TransLegal wrote about the reforms to India’s insurance sector, including the near doubling of permitted foreign direct investment (26% to 49%), provided the Indian insurance company continued to be Indian owned and controlled.  In October 2015, the Insurance Regulatory and Development Authority (IRDA) issued guidelines which explain the concept of “Indian owned and controlled” for insurance companies.

The Indian Insurance Companies (Foreign Investment) Rules, 2015 defined: (a) Indian Ownership of an Indian Insurance company as “…more than 50% of the equity capital in it beneficially owned by resident Indian citizens or Indian companies, which are owned and controlled by resident Indian citizens…” (b) Indian Control of an Indian Insurance Company as “…Control of such Indian Insurance Company by resident Indian citizens or Indian companies, which are owned and controlled by resident Indian citizens…”

Section 2(7A) of the Insurance Laws (Amendment) Act, 2015 clarifies that control included the right to appoint a majority of the directors or to control the management or policy decisions by virtue of shareholding, management rights, shareholders’ agreement or voting rights.

The key requirements for an insurance company to qualify as Indian owned and controlled are:

  • Parliament of India Photo Credit: Wikimedia Commons

    Parliament of India
    Photo Credit: Wikimedia Commons

    Constitution of the Board: A majority of the directors (excluding independent directors) of the Indian insurance company must be nominated by the Indian promoter(s) and / or the Indian investor(s). If the Chairman of the board has a casting vote, such chairman must be a appointed by either the Indian promoter(s) and / or investor(s).

  • Qualifying Quorum at Board Meetings:  Indian directors are required to establish a valid quorum to conduct business. A nominee director representing the foreign investor(s) may be required for a valid quorum at the initial meeting to protect minority shareholder rights. If there is no quorum, subsequent meetings may be conducted following the Companies Act, 2013, which suggests special quorum rights will not be applicable.
  • Appointment of Key Managerial Personnel (KMPs): KMPs, including the chief executive officer, must be appointed by the Indian Board or by the Indian promoter(s) and, or, investor(s). The foreign investor can nominate KMPs (other than the CEO) but their appointment must be approved by an Indian Board.
  • Significant Policies: Control over significant policies must be exercised by an Indian Board. No definition of significant policies has been provided and the affirmative voting rights available to foreign investor(s) will need to be carefully reviewed.

The Guidelines require insurance company compliance by 19 January 2016. An extension for a maximum period of another 3 months can be sought by filing an application with IRDA, which it may grant at its discretion. Further, compliance is to be ensured through self-certification, including filing with the IRDA an undertaking from the CEO, resolution of the Board confirming compliance, copies of the joint venture agreements and amendments thereto.

The Prime Minister, Shri Narendra Modi addressing the gathering at the Indian Community Reception Event, at Singapore Expo, Singapore on November 24, 2015.

The Prime Minister, Shri Narendra Modi addressing the gathering at the Indian Community Reception Event, at Singapore Expo, Singapore on November 24, 2015.

Application to Insurance Intermediaries

The IRDA Act, 1999 defines insurance intermediaries as insurance brokers, reinsurance brokers, insurance consultants, surveyors and loss assessors.  These intermediaries must comply with the Guidelines if more than 50% of their revenue is from insurance activities.

The Guidelines are one of the first issued by India specifically requiring Indian control. They do, however, leave the interpretation of the criteria to the IRDA’s Chairperson.  As such, it will be  interesting to see how compliance and enforcement are approached and determined.

India: Legislative Updates

Francisco A. Laguna

 This week, TransLegal begins a series on recent legislative changes in India.  In the following posts, we will analyze some of the more significant ones for foreign investors.  Today, we focus on changes to India’s External Commercial Borrowing rules.

Symbol for Rupee (INR) Photo Credit: Wikimedia Commons

Symbol for Rupee (INR)
Photo Credit: Wikimedia Commons

The Reserve Bank of India (RBI) has substantially revised the rules governing external commercial borrowing (ECB) to allow Indian businesses to borrow monies from certain foreign banks.  The new rules are found in the External Commercial Borrowings (ECB) Policy – Revised Framework, RBI A.P. (DIR Series), Circular No. 32, 30 November 2015.  They enter into force once published in the Official Gazette.

The new ECB rules classify ECBs into three categories, broaden the list of eligible lenders and reduce the restrictions on how ECB monies may be used.


ECB will now fall into three “tracks”, depending on the term of the loan and the currency of the loan:

Track I ECBs are defined short- to medium-term (3 – 5 years / 5 – 10 years), foreign currency-denominated loans, with an all-in-cost ceiling, over a 6-month LIBOR, of 300 basis points and 450 basis points, respectively.

Track II ECBs are also foreign currency-denominated with a minimum maturity of 10 years and an all-in-cost ceiling of 500 basis points.

Track III ECBs are rupee-denominated loans, with all-in-cost ceilings determined by then-existing market conditions.

Presidential Standard of India Photo credit: Wikimedia Commons

Presidential Standard of India
Photo credit: Wikimedia Commons

Eligible Lenders / Investors

Regardless of the track, eligible lenders now include long-term investors, such as regulated financial entities, insurance funds, pension funds and sovereign wealth funds. In addition, foreign branches and subsidiaries of Indian banks qualify as eligible lenders for Track I.



End Use

Track I ECBs may be applied, among things, to: import capital goods; purchase capital goods domestically; finance new projects, or expand or update existing projects; invest in foreign subsidiaries or joint ventures; acquire shares of public sector projects under the disinvestment rules; refinance existing trade credits used to import capital goods; refinance existing ECBs; finance general corporate expenditures; and pay for capital goods already shipped / imported but as yet unpaid.

Flag of India Photo Credit: Wikimedia Commons

Flag of India
Photo Credit: Wikimedia Commons

Except for ECBs from non-banking finance companies, long-term ECBs, whether foreign currency or rupee-denominated, can be used for any purpose except: real estate purchases or speculation; investing in capital markets or domestic equities; or to lend monies to third parties involved in such activities.

Track III ECBs from non-banking finance companies can be used exclusively for: making loans to entities in the infrastructure or construction section; making secured loans to domestic entities to acquire capital goods and equipment; and to acquire capital goods and equipment that will be leased or leased-to-purchase by domestic entities.

Eligible Borrowers

As indicated above, the new ECB rules were adopted to increase foreign capital flows into India and provide companies with increased funding sources, especially in the infrastructure sector.  However, the class of eligible borrowers has been narrowed. Previously, all corporates entities were to take out ECBs, subject to end-use restrictions.  The new rules limit eligible borrowers to companies in the manufacturing, software development, shipping, airlines or infrastructure sectors.

TransLegal assists companies navigate the complexities of the Indian legal and financial system.  Call us with your questions.  Next week, we’ll explore developments in Indian labor and employment laws.

RoboCalls and Pre-Recorded Calls

Francisco A. Laguna & Annapurna Nandyal

In the US, businesses and individuals alike are consistently harassed by robocalls and pre-recorded calls.  TransLegal receives an annoying average of 6 such calls a day, including weekends. What exactly are these recorded messages, who makes them and is there any protection against such prerecorded calls? Today we focus on robocalls or pre-recorded calls and consumers’ right to privacy.

A “robocall” is when you receive a call consisting of a prerecorded message. Such calls are placed by machines known as automated dialing announcing devices. These machines store thousands of phone numbers and dial them automatically and play a recorded message. Robocalls are extensively used by telemarketers, debt collectors and political candidates during election times. To curb the unwanted calls, national and state laws have regulations for placing robocalls.  State laws vary; however, federal law prevails in all states. In 1991, Congress passed the Telephone Consumer Protection Act (TCPA) to regulate the use of prerecorded messages and to protect the consumer’s right to privacy. The TCPA, enforced by Federal Communication Commission (FCC), sets strict requirements for companies making robocalls.

"Don Adams" by General Artists Corporation-GAC-management. - Transferred from en.wikipedia to Commons.(Original text : eBay itemphoto frontphoto backeBay itemphoto front). Licensed under Public Domain via Wikimedia Commons

“Don Adams” by General Artists Corporation-GAC-management. – Transferred from en.wikipedia to Commons.(Original text : eBay itemphoto frontphoto backeBay itemphoto front). Licensed under Public Domain via Wikimedia Commons

Allegedly, it is illegal for companies to make robocalls if they fail to meet the following criteria:

  1. Express Written Consent: All non-emergency robocalls, both telemarketing and informational, require a consumer’s permission to be made. These calls include political, polling and other non-telemarketing robocalls. The consent may be given in various ways, including checking consent box on an online form. Consumers must voluntarily consent to receive robocalls or text messages when submitting their phone numbers.
  2. Proper identification: Companies using robocalls services must identify themselves in a proper manner. A caller must state:
    • His or her identity
    • The name of the business on whose behalf he or she is making the call
    • The address of the business responsible for placing the call
    • The phone number of that business
  3. “Opt Out” option: Even though consumers consent to robocalls, companies must provide an option for the recipient to opt-out of calls. Consumers can take back their permission by registering with the do not call registry.

In our experience, the robocalls TransLegal receives wholly fail these requirements.  In addition, if we continue the call to speak to a live person, that person is trained to hang up if we ask to be taken off their calling list or ask to speak with a manager.  Therefore, the requirements are merely illusory.

Emergency Calls are rightly exempt. (Karen Allen of the American Red Cross takes a call at the Putnam County Emergency Operations Center during Gov. Earl Ray Tomblin's press conference Jan. 12, 2014, in Winfield, W.Va. Residents of Kanawha, Boone, Putnam, Lincoln, Logan, Clay, Roane and Jackson counties were told to stop using tap water after a chemical leak contaminated the West Virginia American Water company's system in those areas. (U.S. Air National Guard photo by Staff Sgt. De-Juan Haley/Released)

Emergency Calls are rightly exempt. (Karen Allen of the American Red Cross takes a call at the Putnam County Emergency Operations Center. (U.S. Air National Guard photo by Staff Sgt. De-Juan Haley/Released).)

Some types of calls are exempted from the above rules. Robocalls related to emergencies or health are legal for both landline and mobile phones.  Non-profit, tax-exempt organizations and political calls are legal for land line phone numbers even without written consent. However, non-profits and political parties still need express written consent to call mobile phone numbers.

In June 2015, the FCC updated the TCPA act to address the over growing menace of robocalls. Under the new order, text messages count as calls, phone companies can provide robocall-blocking services to customers, customers must consent to receive robocalls and they can revoke that consent at any time.  An exception is provided to banks, health care providers and pharmaceutical companies to send a limited number of communications containing vital financial or medical information to consumers without their consent. Also, if a previous owner of a reassigned phone number consented to receive communications from a business, that business is now allowed one call to the number’s new owner before penalties are incurred.

Congress has explicitly empowered consumers to choose to take legal action against TCPA violations. Making such calls without consumers consent carries a $500 penalty per phone call.  If the consumer can show that the TCPA was violated knowingly and willfully, the penalty is increased up to $1,500 per phone.  To protect their rights, consumers must:

  • Register their phone number in Do Not Call list. donotcall.gov
  • Request their service provider to offer robocall-blocking technology, which is now legal. Using robocall-blocking technology helps FCC to keep track of unwanted calls and block those numbers for others also.
  • In case, the problem persist, consumers can record that number and let the FCC know. Complaints can be filed online, telephone or by mail. fcc.gov

TransLegal placed its landline and fax line with the Do Not Call list in 2003.  Twelve years later, we are still receiving them . . .

We hope others have had better results!  Let us know!