Tamil

Nadu National Law School

Alternative Dispute Resolution

Practical Examination Arbitration

Clemanti Services PLC
Vs.
Dense Bull India Ltd.



1. Clemanti Services PLC (hereinafter, Clemanti) is a London based software provider
for trading of securities and is incorporated in the United Kingdom. Dense Bull India
Ltd. (hereinafter, Dense) is a public company incorporated in Indin that provides
consultancy and brokerage services for trading of securities at the National Stock
Exchange Indin.

2. In order to modernize its trading wing, Dense seeks to deploy automated software
that recommends and analyses securities for effective trading at the National Stock
Exchange, based on the data entered by the user. Pursuant to this, Dense enters into
a license agreement with Clemanti (hereinafter, the Agreement) whereby Clemanti
deploys the automated software on SAAS platform (hosting it on its servers) for Dense
to access the software. In return, Dense agrees to pay a monthly subscription fee of
USD 6,000, excluding service tax. The software is also capable of initiating purchases
of certain eligible securities.

3. The relevant portions of the Agreement are reproduced below. Please note that
Clemanti is the Licensor whereas Dense is the Licensee for these purposes:

Clause 4 Grant of License:
 The Licensor hereby agrees to grant a limited, exclusive, non
transferrable license to the Licensee to access and use the
Software according to the terms of this Agreement.

Clause 12 Usage

12. 1 The Licensee agrees to deploy and use the software only
for the purposes and to the extent permitted by law. At no point
in time shall the Licensee attempt to access or use the Software
directly or indirectly for any purposes that is illegal or contrary
to the spirit of law.

Clause 18 Arbitration

18.1 The Parties agree that all disputes in relation to this

Agreement shall be resolved by Arbitration. The Arbitral
Tribunal shall comprise of two arbitrators where each Party is
entitled to nominated one arbitrator according to the law. The
Arbitration shall be conducted at Trichy and in English. In the
event of conflict between the two arbitrators, the decision of the
arbitrator appointed by the Claimant shall be final and binding.

18.2 This agreement shall be governed by the Laws of England.

4. After six months of the date of execution of the aforesaid Agreement, Indin enacts the
National Security (Protection of Sensitive Data) Act, whereby transfer of all sensitive
data that may impact matters of national security and economy is restricted. This Act
prohibits every Indin national from disclosing any sensitive data pertaining to Indian
economic affairs to any citizen (individual or corporate) who is a foreigner.

 5. In light of the Act, Dense conducts a board meeting and takes a call that using the
software services provided by Clemanti does not constitute any illegality under the
Act. The Board further resolves to challenge the constitutionality of the relevant
provisions of the Act.

6. Dense receives summons from the Enforcement Directorate of Indin to wind up all of
its activities stating that by entering certain data into the automated software, it has
revealed important data about trading activities at the National Stock Exchange to an
English Company thereby violating provisions of the National Security (Protection of
Sensitive Data) Act. Aggrieved, Dense approaches the High Court of Depaca, Indin
seeking a Writ prohibiting interference by the Enforcement Directorate. Dense also
alleges that the accusation of the Enforcement Directorate is frivolous and baseless
since data that that it enters in the software (provided by Clemanti) is not sensitive
data and has no bearing on impacting national security or economy.

7. Clemanti learns of these developments and delivers a notice of Arbitration upon
Dense alleging the breach of Clause 12 of the Agreement. Clemanti claims a damage
of USD 20,000 on account of such breach as it alleges that using the software for illegal
purposes by Dense has caused it reputational damage. In the notice of arbitration,
Clemanti appoints Mr. Mohammed T. Azaad as it arbitrator.

8. Dense replies to the notice of arbitration reaffirming that it has not used the Software
for any illegal purposes. Dense further claims that 1) the issue is not arbitrable
according to the applicable laws since it concerns public interest; and 2) the arbitration
agreement, particularly Clause 18, is not valid as per the applicable law. In this regard,
Dense refuses to enter into arbitration with Clemanti on these matters.

9. Clemanti approaches the High Court of Depaca, Indin and obtains and order from the
court directing Dense to enter arbitration and settle all of its issues, including those
relating to validity and arbitrablity, before the competent arbitral panel. Complying
with this order, Dense appoints Ms. Ruchi T. Singh as its arbitrator.

 10. The arbitral panel now comprises of Mr. Mohammed Azaad and Ms. Ruchi T. Singh.
Given these facts, you are expected to frame relevant legal issues, prepare arguments
and present it before the arbitrators. The moot arbitrators are expected to question
the lawyers/parties on relevant issues, obtain substantial arguments and author an
enforceable award deciding all of the questions of law and thereby resolving the
dispute on merits.

11. The laws of Indin are pari materia with the laws of India. This is a hypothetical problem
and bears no implication in reality. It is only for educational use. No suggestions or
viewpoint of the author pertaining to real scenarios may be derived using this
hypothetical problem as the basis.