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Published : July 12, 2014 | Author : Aashna
Category : Contracts laws | Total Views : 6317 | Rating :

writer, Researcher

Comparative Analysis Of A Treaty Governed By Vienna Convention And A Contract Regulated By The Indian Contract Act

We would like to thank Ms. Anjali Thanvi for giving us the opportunity to prepare a project on such a topic which is beyond the scope of the curriculum and yet significantly related to the subject. Also she spent a considerable amount of time in explaining us the relevance and the importance of this topic. The methodology of doing the research was also suggested by her which was of great help while writing the paper. We would also like to thank the library staff for providing us adequate materials and books on time. Lastly we would like to thank our parents for sending us to such prestigious institution which gives us a platform for doing research on topics of International Significance.

The project is divided into three parts. The first part lays down, for the convenience of the readers, the definition of a treaty as per the Vienna convention. The second part primarily focuses on the eight similar ingredients of an Indian Contract and a treaty which is governed by the Vienna convention. The objective of the researcher is to find out the similarities between the two and on the basis of those similarities conclude whether a treaty can be called a contract or not. The last part is the conclusion of the paper which brings out the interpretation of the second part by bringing out the advantage/ disadvantage of the sought after conclusion.

Article 2(1)(a) of the Vienna convention defines a treaty as an international agreement concluded between the states in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever it particular designation.

As with most of the convention, although the definition is expressed to be for the purposes of the convention and is limited to treaties between states, its elements now represent customary law.

To be a treaty an agreement has to have an international character. The convention uses treaty as a generic term. The constitution law or practice of some states divide treaties variously into categories such as inter-state, inter-governmental, inter-ministerial, or administrative.

The convention does not recognize such distinctions. Treaties can also be described as universal or regional, but this has no legal significance. The International Law Commission’s commentary makes it clear that the definition of treaty includes those international agreements which by the 1960s were increasingly being drafted in a less formal manner. In 1945 there was still some confusion as to whether the international agreements drafted in a less formal way could properly be called treaties, and this was reflected in Article 102 of the United Nations Charter which requires the registration of every treaty and every international agreement.

Sections 11 12 of the I.C.A.

Every person is competent to contract who is of the age of majority according to the law to which he is subject,and who is of sound mind and is not disqualified from contracting by any law to which he is subject.

Article 6 of the Vienna convention

Every state is competent to contract. A treaty can be concluded between a state and another subject of international law, in particular an international organization or between international organizations. By state is meant a sovereign independent state. This requires territory with a settled population, a sovereign government and independence from any other state. A treaty made between states may be expressed to be made by heads of the state, or on behalf of the states, their governments or, less often, their ministries.

Article 13 of the I.C.A.
Two or more parties are said to consent when they agree upon the same thing in the same sense.

Article 20 of the Part 8

It defines consent. Valid consent by a state to the commission of a given act by another state precludes the wrongfulness of that act in relation to the former state to the extent that the act remains within the limits of that consent.

Article 11 of Vienna Convention

It lists the ways in which a state can express its consent
# Signature
# Exchange of instruments constituting a treaty
# Ratification, acceptance or approval
# Accession
# Any other agreed means

Article 14
Consent is said to be free when it is not caused by:-
# Coercion
# Undue influence
# Fraud
# Misrepresentation
# Mistake

Preamble of the Vienna convention

The principles of free consent and of good faith and the pacta sunt servanda rule are universally recognized.

Article73 of the I.C.A.

Compensation for loss or damage caused by breach of contract.- When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.- When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.

Breach as defined in the Vienna Convention
Breach of an international obligation constitutes an international wrong, from which flow certain legal consequences. The law governing the topic is customary international law. Disputes between the parties suggest that usually there is one party who is in breach of a duty.

A contract being a correlative set of rights and obligations for the parties would be of no value, if there were no remedies to enforce the rights arising there under. The Latin maxim ‘Ubi jus, ibi remedium’ denotes where there is a right, there is a remedy.

The remedies for breach of contract are:-
1. Suit for damages or compensation
With respect to compensatory damages, a defendant is liable to a plaintiff for all the natural and direct consequences of the defendant's wrongful act.

2. Suit for specific performance
A decree of specific performance, is one by which the court directs the defendant to performthe contract according to its terms.

3. Suit for injunction
An injunction is a court order requiring an individual to do or omit doing a specific action. It is an extraordinary remedy that courts utilize in special cases where preservation of the status quo or taking some specific action is required in order to prevent possible injustice. Injunctive relief is a discretionary power of the court in which the court, upon deciding that the plaintiff's rights are being violated, balances the irreparability of injuries and inadequacy of damages if an injunction were not granted against the damages that granting an injunction would cause.

4. Suit for rescission
The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed.

5. Punitive damages
Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. Punitive damages, also known as exemplary damages, may be awarded by the trier of fact (a jury or a judge, if a jury trial was waived) in addition to actual damages, which compensate a plaintiff for the losses suffered due to the harm caused by the defendant.

If a party has been injured by a breach of it by another party, in addition to the remedies which may be available under the convention, it may seek one of the following:-

1. Cessation of the Wrongful Conduct
If the breach has a continuing character, the state in breach is under an obligation to cease the conduct causing the breach. To do so would not of course absolve it from the responsibility for the consequences of the breach.

2. Assurances and guarantees of Non-Repetition
A promise not to o it again is an even more obvious remedy which may be sought along with other remedies.

3. Satisfaction
Particularly when the damage is intangible, the injured state may seek satisfaction by way of an apology, nominal compensation or, if the breach is especially grave, exemplary damages. However, in the case of breach of treaty it is more likely than satisfaction would be sought in addition to another remedy.

4. Restitution in Kind
Provided it is possible, and would not involve a burden out of all proportion to the benefit which the injured state would gain from compensation, the injured state is entitled to the reestablishment of the situation which existed before the breach occurred. Restitution may , of course, be combined with other remedies. If a state agrees by treaty to lend another state national treasures, and the borrower does not return them , the lender will, in addition to compensation for the consequent loss of opportunity to display the treasures, and expenses, naturally be able to claim restitution of the objects. On the other hand, for the breach of an air services agreement which prevented the airlines of the other party from flying, and end to the unlawful conduct and compensation would be the only feasible remedies. Although, in principle the state should only seek other remedies if restitution is not possible.

5. Compensation
Compensation is the most likely remedy to be sought, particularly when nationals of the injured party have suffered loss. Today those nationals are often companies. Compensation can include any economically assessable damage, including loss of profit and interest. Even if a breach has been admitted, the amount of compensation may have to be determined by arbitration or other means of settlement. A leading case in the field of international aviation arose in 1988 under the US-UK Air Services Agreement 1977 (Bermuda 2), concerning the lawfulness of the user charges for US aircraft using London’s Heathrow Airport.

6. Countermeasures
There are some times other ways in which a state can respond in kind to a breach of treaty. Apart from, or perhaps in addition to, compensation, resort to counter measures can be the most effective remedy for breach of treaty. Because bi-lateral treaties create reciprocal rights and obligations between only two parties, counter measures can offer a convenient, quick, and therefore effective, means of dealing with the breach. The taking of countermeasures in response to the breach of a multi-lateral treaty can arise more complex issues. Counter measure usually consist in the injured party not complying with one or more of its obligation under the treaty, or, possibly, under another treaty. In the 1997 judgment in the Gabcikovo case, the international court of justice held that for a counter measure to be justified it has to meet four conditions.

1. It must be taken in response to a previous international wrong of another state and directed against that state.
2. The injured state must have called on the other state to discontinue its wrongful conduct or make reparation for it.
3. The purpose must be to induce the other state to comply with its obligations.
4. The effects of the counter measure must be proportionate to the injury suffered, taking account of the rights in question, and therefore the countermeasure must be reversible.

An example of a counter measure in the field of international aviation is for one party to an air services agreement, in response to a breach by the other party or its airlines, to restrict the number of weekly flights to its territory by the airlines of the other party.

Before taking counter measures a state must negotiate or go through a dispute settlement process provided in the treaty. Air services agreement govern civil air transport between the territory of the parties, regulating the routes which can be flown, the number of flights and the size of aircraft. Any interruption or restriction or services is a serious matter for an airline, for revenue lost can never be recouped, except by compensation.

7. Retorsion
Retorsion describes the imposing of a penalty which does not involve any unlawful measure. An example would be the unilateral withdrawal of an ambassador, cancellation of an official visit by a head of state or a decision not to offer financial help. In 1999 several EU states sought to block the participation of Israel in a 10.3 billion pounds scientific and research programme because of its failure to implement the Wye peace accord. This point is to show displeasure in away which may have an effect, but without making matters significantly worse.

The general rule is that only the persons entitled to the benefits or bound by the obligations of a contract are entitled to sue or be sued upon it. No right maybe enforced by a person who is not a party to a contract. This so even where it is clear from the contract that some provision in it was intended to benefit such third party.

Exceptions to the application of the principle
1. Trust
Where one party makes a promise to the second party for the benefit of the third party, the promise can be enforced by the third party against the first party if the second party has constituted himself trustee of first party’s promise for the third party.

2. Family Arrangements and Marriage Settlements
The specific relief act, 1963 enables specific performance of a contract being a settlement on marriage, and family arrangement at a suit of any person beneficially entitled there under, and creates an exception to the rule that a party cannot sue.

3. Creation of a charge
A stranger to a contract can sue for the money made payable to him by it where the money is charged on immovable properties or also where specific money in suit is allocated by the promisor in favour of such third party.

4. Covenants Running with Land
The Privity of contract doctrine has been relaxed for commercial reasons to allow certain positive or restrictive covenants to run with the land, so as to benefit or burden persons not party to the contract imposing such covenants.

Privity of Treaty according to the Vienna Convention:-
In relation to a treaty, a third state is a state which is “not a party to the treaty” (Article 2(1)(h)). A range of states fall within this definition, from a state which is not eligible to become a party, to a state which has ratified but for which the treaty is not yet in force.

Similar rules apply laws of contract, but the rule in the convention rests firmly on the sovereignty and the independence of the state. Thus a treaty, whether bilateral or multilateral, cannot, by its own force, impose an obligation on a third state, nor modify in any way the legal rights of a third state without its consent. By the same token, a right cannot arise for a third state from a treaty which makes no provision for that state.

Articles 35, 36 elaborate the general rule by setting out those circumstances in which a treaty can apply to a third state.

1. Treaties providing for Obligations for Third States
Firstly, an obligation arises for a third State from a provision of treaty if the parties to the treaty intend the provision to be the means of establishing the obligation.

Secondly, the third state expressly accepts that obligation in writing. Conduct consistent with the acceptance of the obligation will not, of itself, bind the third state. Even when a third state has accepted an obligation in a treaty, it does become a party to the treaty.

2. Treaties providing for Rights for Third States
An intention to create only a benefit (such as an agreement between the parties to restrict noxious emission which will, as a matter of fact, benefit also the third state) does not confer any right in the third state. Whether states have created a right for a third state depends on their intention. Thus a right arises for a third state (or a group of state to which it belongs) from a provision of a treaty if the parties to it so intend and the third state assents. But, since the right accorded to the third state does not require it to do anything, its assent is assumed as long as its contrary is not indicated, unless the treaty provides otherwise.

Section 17 of the I.C.A.
Fraud means or includes any act committed by a party to a contract, or with his connivance, or by his agent with intent to deceive another party thereto or his agent, or to induce him to enter into a contract. Hence the contract so concluded would be voidable.

Article 49 of the Vienna Convention
If a state has been induced to conclude a treaty by the fraudulent conduct of another negotiating state, the state may invoke the fraud as invalidating the consent to be bound by the treaty.

Section15 of the I.C.A.
It is the committing or threatening to commit, any act forbidden by the Indian Penal Code, 1860 or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. Hence the contract so concluded is voidable.

Article 51 of the Vienna Convention
The expression of the state consent to be bound by a treaty has been procured by the coercion of its representative through acts or threats directed against him shall be without any legal effects.

Article 52 of the Vienna convention
A treaty is void by if its conclusion has been procured by the threat or use of force in violation of the principles of international law embodied in the charter of United Nations.

The above mentioned sections/ clauses of a valid Indian Contract and a valid Treaty as per the Vienna Convention show that there are many similarities between the two. It gives a positive signal to the Indian contract Act that it is going in parlance with the International Convention and customs and hence there would not be a hindrance in the formation of the international contracts and treaties because of the prior positivist nature of the act. It also shows that till date there is no redundancy in the act because it goes hand in hand with the world’s most reliable and the most acceptable convention.
# Chapter 10 of the same book anthony
# But see Mc. Nair , pp739-54, on the different legal character of treaties
# YBILC(1966).II.p.173AT pp.188-9.
# Indian majority act(9 of 1875)
# See Openheim, para 34
# legal-dictionary.thefreedictionary.com/damages
# www.academia.edu/3091909/Exceptional_Nature_of_Specific_Performance_in_the_Indian_law.
# www.law.cornell.edu/wex/injunction
# legal-dictionary.thefreedictionary.com/rescission.
# legal-dictionary.thefreedictionary.com/punitive damages
# See the 1971 Egypt – uk treaty for the loan of treasures of Tutankhamen (824 UNTS71(No. 11809);UKTS (1957)19).
# 102 ILR 261.
# ICJ Reports(1997)p.7 at paras 82-7
# Financial Times, 1 February 1999.
# Alice Marie Vandepitte v. Preferred Accident Insurance company of New York, (1933) AC 70.
# M.C Chacko v. State of Travancore AIR 1970 SC 504 at 507-08.
# Scruttons Limited v. Midland Silicons Limited (1962) AC 446.
# Tomlinson v. Gill, (1756) AMB 330.
# Janaki Bala Debya v. Maheshwar Das, AIR 1942 Pat 460.
# Iswaran Pillai v. Sonnivevaru, AIR 1914 Mad 701.
# Beswick v. Beswick, (1967) II 1197 (HL).
# Article 36(1) of the Vienna convention
# Cundy v. Lindsay, (1978) 3 App Cas 459
# Chikkam Ammiraju v. Chikkam Seshamma, AIR 1917 Mad 288.

***This Article is Authored by: Aashna Jain and Sakshi Yadav 


Writing award This article has been Awarded Certificate of Excellence for Original Legal Research work by our Penal of Judges

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