Introduction

With the rise of the digital economy and global media platforms, copyright-related disputes have become increasingly complex and frequent. As parties seek efficient and confidential methods of resolving such disputes, arbitration has emerged as a prominent alternative to conventional litigation. However, one critical legal question under Indian law is whether copyright disputes can be settled through arbitration. This question hinges on the concept of arbitrability—the suitability of a subject matter for adjudication by a private arbitral tribunal instead of public courts. This article offers a comprehensive exploration of arbitrability in the context of copyright law in India, the statutory and judicial framework shaping this issue, relevant case law, comparative international perspectives, and implications for stakeholders.

Understanding the test of Arbitrability in Indian Law

The term “arbitrability” refers to the question of whether a particular subject matter can be submitted to arbitration. Indian courts have historically classified disputes into three categories for this purpose: those concerning rights in rem; those concerning rights in personam and those concerning rights in personam which are subordinate to rights in rem. 

This was elaborated in the landmark judgment of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532, where the Supreme Court held that disputes involving rights in personam—private rights enforceable against specific individuals—are generally arbitrable. In contrast, rights in rem—rights enforceable against the world at large—typically fall outside the purview of arbitration and are best left to public judicial forums.

Examples of non-arbitrable matters include criminal offenses, matrimonial disputes, guardianship, insolvency, and testamentary issues, as these inherently involve public rights and third-party interests, the essence of which is taken from Section 41 of the [Indian] Evidence Act, 1857. This is one manner to test arbitrability under the Indian law. 

The Arbitration and Conciliation Act, 1996, as amended (hereinafter “Arbitration Act”) is the principal legislation governing arbitration in India. While it does not explicitly list arbitrable or non-arbitrable matters, Section 2(3) provides that certain disputes may not be arbitrable if a contrary provision exists in another law. Section 34(2)(b)(i) allows a court to set aside an arbitral award if the subject matter is not capable of settlement by arbitration under Indian law. Therefore, under the Arbitration Act, the other test that can be seen whether another statute expressly or impliedly excludes arbitration for specific types of disputes.

The Copyright Act, 1957, governs copyright law in India. It provides for various rights, including the right of reproduction, distribution, public performance, adaptation, and translation. The Act also provides civil and criminal remedies for infringement. Section 55 of the Copyright Act allows for remedies like injunctions and damages, while Section 62 of the Copyright Act mandates that civil suits for copyright infringement be instituted in the district court having jurisdiction.

While the Copyright Act outlines the forum for filing such suits, it does not expressly prohibit arbitration. This has led to varying interpretations by courts on whether the presence of a statutory forum precludes arbitration. Some courts have viewed this provision as implying an exclusive jurisdiction of courts, while others have held that it merely governs the forum for litigation and does not affect parties’ right to choose arbitration.

Nature of Copyright and Types of Disputes under it

A copyright is generally considered a right in rem, given that it grants the creator exclusive rights enforceable against the world. However, not all disputes arising under the Copyright Act are in rem. Disputes over licensing agreements, royalty payments, or contractual breaches between specific parties are considered rights in personam. Thus, arbitrability depends on the nature of the dispute rather than the classification of the right itself.

For instance, a dispute between a film producer and a distributor regarding overstepping the boundaries of a licensing agreement is a private matter that does not require public adjudication. Such disputes are therefore considered arbitrable. On the other hand, disputes that require determining the ownership of copyright or its subsistence may involve public interest and third-party rights and are generally seen as non-arbitrable.

Judicial Precedents on Arbitrability of Copyright Disputes

The journey of Indian jurisprudence on this issue began with a conservative approach. In Mundipharma AG v. Wockhardt Ltd (ILR 1991 DELHI 606), the Delhi High Court held that the Copyright Act provided exclusive remedies through civil courts, making such disputes non-arbitrable. This decision was based on the understanding that copyright enforcement had a statutory public dimension.

However, this view evolved significantly with the decision in Eros International Media Ltd. v. Telemax Links India Pvt. Ltd. (2016), where the Bombay High Court allowed arbitration of a copyright infringement claim arising out of a distribution agreement. The court held that such a claim was contractual in nature and thus arbitrable. Justice G.S. Patel noted that while the underlying copyright is a right in rem, the dispute at hand was a right in personam concerning contractual obligations.

Further support came from the Delhi High Court in Hero Electric Vehicles Pvt. Ltd. v. Lectro E-Mobility Pvt. Ltd. (2021). This case involved a trademark dispute rooted in a family settlement. The court held that since the dispute arose from contractual obligations and did not concern the validity of the trademark or affect public rights, it was arbitrable. The reasoning applies equally to similar copyright disputes.

In Vidya Drolia v. Durga Trading Corporation (2020), the Supreme Court provided a comprehensive framework to determine arbitrability through a four-fold test:

1. Whether the cause of action is related to rights in rem.
2. Whether the dispute affects third-party rights.
3. Whether the dispute involves sovereign or public interest functions.
4. Whether another statute expressly or by necessary implication excludes arbitration.

Applying this framework, the Court observed that while some intellectual property (IP) matters such as grant or registration of patents and trademarks are inherently sovereign functions and non-arbitrable, however contractual disputes concerning IP can be arbitrated. This judgment has played a crucial role in shaping the pro-arbitration trend in IP disputes, including copyrights.

Comparative Jurisprudence: International Approaches

Globally, jurisdictions have adopted a liberal approach towards the arbitrability of IP disputes:

• United States: The Federal Arbitration Act supports arbitration of IP disputes. U.S. courts have held that even statutory claims under the Copyright Act can be arbitrated if the dispute pertains to private rights.
• United Kingdom: The UK recognizes the arbitrability of copyright and other IP disputes, provided the arbitral award does not bind third parties.
• Singapore: The Intellectual Property (Dispute Resolution) Act, 2019 explicitly allows arbitration of IP disputes, including validity and infringement issues, provided the award binds only the parties.
• Hong Kong: Similarly, the 2017 amendment to its Arbitration Ordinance clarifies that IP disputes are arbitrable, again emphasizing the inter partes effect of arbitral awards.

These jurisdictions demonstrate that arbitration can efficiently resolve IP disputes, provided mechanisms exist to protect third-party rights and public interest.

Implications for Stakeholders

The evolving legal landscape in India offers clarity and opportunities for stakeholders in the creative and digital industries:

1. Content Creators and Rights Holders: Artists, authors, musicians, and filmmakers can include arbitration clauses in licensing and distribution agreements, enabling swift and confidential resolution of disputes.
2. Digital Platforms and Broadcasters: Platforms such as OTT services, streaming apps, and broadcasters often face disputes over content licensing. Arbitrability allows them to resolve such matters efficiently without court delays.
3. Legal Practitioners: Lawyers advising clients on IP-related transactions can now safely recommend arbitration as a dispute resolution mechanism, especially for contractual disputes that do not involve determining the validity or existence of IP rights.
4. Arbitrators and Institutions: Arbitration institutions and IP-expert arbitrators will see a growing demand as more IP-related matters are brought to arbitration.

Best Practices for Enforceable Arbitration Clauses

To ensure enforceability and avoid jurisdictional conflicts, parties should:

• Clearly define the scope of arbitrable disputes in the contract.
• Include governing law and seat of arbitration.
• Specify the rules and institution (e.g., WIPO Arbitration Rules, SIAC, or MCIA).
• Acknowledge that certain remedies (such as declaration of ownership) may require court adjudication.

Conclusion

The arbitrability of copyright disputes under Indian law has undergone a transformative journey. From early skepticism, the judiciary has moved toward a balanced and pragmatic approach. While core issues involving the validity or subsistence of copyright may remain non-arbitrable, disputes arising out of licensing contracts, royalty agreements, and other inter-party matters are increasingly seen as suitable for arbitration. This evolution aligns Indian law with global best practices and enhances the attractiveness of arbitration for resolving IP disputes.

As India’s legal ecosystem matures further, it is anticipated that both legislative and judicial developments will continue to support the use of arbitration in resolving complex copyright disputes, thereby strengthening the framework for protecting creative rights in the digital age.

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Footnotes

1. Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532.
2. Arbitration and Conciliation Act, 1996, Sections 2(3) and 34(2)(b)(i).
3. Copyright Act, 1957, Sections 55 and 62.
4. Mundipharma AG v. Wockhardt Ltd., ILR (1991) 1 Del 606.
5. Eros International Media Ltd. v. Telemax Links India Pvt. Ltd., 2016 SCC OnLine Bom 217.
6. Hero Electric Vehicles Pvt. Ltd. v. Lectro E-Mobility Pvt. Ltd., 2021 SCC OnLine Del 1058.
7. Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1.
8. Intellectual Property (Dispute Resolution) Act 2019 (Singapore).
9. U.S. Code Title 35 § 294 – Voluntary arbitration.
10. UK Arbitration Act, 1996.
11. Hong Kong Arbitration Ordinance (Amendment of 2017).
12. Federal Arbitration Act, United States.