International Research Center

Happy to note that my blogging experience has taken a new route.. With the help of my colleagues and other passionate writers, we have started an international trade research center.

Right now we are working on stage 1 — gathering a group of international student bloggers, both legal bloggers (international law students, who are lawyers and judges from around the world getting their masters degrees in US law) and business bloggers (international business students who have lived or worked in other countries). 

The blog page will be the “Research Center” tab on leaflogistics.com

The short-term goal is to generate something that students enjoy — students will share and compose articles, comment, and learn from each other in a professional online environment. 

The intermediate goal is to generate something businesspeople visiting the site find useful — once that happens, by extension the student bloggers will have a nice resume builder because they have been posting on an impressive international business site. 

The long-term goal is to organize more formally a consulting group, generate paying work, grow the practice and make it a pipeline for employing international graduate school alums. 

Happy Blogging!!

 

 

Do You Have Three Words?

I love the Friday segment of Good Morning America.  Every friday they dedicate a minute to people who send in videos of “their three words”.  These three words can be absolutely anything – it could be about your life, your job, your family…, anything! My personal favorite “We Dream Big”.

So this segment got me thinking about one thing – Does your business have its own three words?

1.  Define your Vision (that’s incidentally 3 words!) 

I can always tell when an entrepreneur has a vision.  He/she may not necessarily be able to articulate their vision in an effective manner but they sure are passionate about their “baby”.  If you fall in the category of inarticulate entrepreneurs, think about defining your vision in 3 words!  Let your baby speak for itself!

2.  Have An Effective TagLine

As I write this post, my friend’s company is struggling to come up with a catchy tagline. I asked him why he was stressing so much on a tagline. He had one thing to say “I need to separate myself from the competition”. My suggestion “Think of 3 words”!! 

3. Ask Your Employees

You are already paying your employees, why not ask them for creative suggestions.  Have a contest looking for “3 words that best describe the business”. You achieve two things by this: a) a prospective tagline b) a summary of your vision as understood by others.

Since the theme of this post happens to 3 – i am going to stop here.

But tell me, have you thought about your 3 words?

 

Wind Energy & Why India Might Be Your Answer

Wind energy in India is seeing a robust growth thanks to the enormous opportunities that the geographical landscape has to offer to the industry. Two decades back, India gave birth to a young wind energy industry which has grown by leaps and bounds. The nascent industry of the 90’s has risen to become one of the world’s largest.

Together with USA, China, Germany and Spain, India accounts for about 74.2% of the world’s wind capacity in 2010.  This is a noteworthy growth compared to 72.9%, which was accounted for in 2009. India can boast of being the second largest market in wind energy with a growth rate of 10.7% and accounting for a total capacity of 13 GW. The future looks good for India, though China sits in the driving seat in the continent. The focus of the world in terms of wind energy has shifted to Asia with China being the leader in setting up wind energy farms and India becoming a leading consumer of wind energy products. Though India is still far behind in the amount of installed capacity per person at 0,011 Kw/person, given its huge population which is ever increasing, the reach of wind energy to a large mass of people at such an early stage of the industry is being unrealistically optimistic. Yet the Indian wind turbine manufacturing industries like Suzlon, are finding market space not just in India but also the world over. Along with China, Korea and Japan, India has increased its market share significantly globally[2].

This section looks at the history, governmental policies, the future and the barriers towards the success of wind energy in India.

1. History

Wind Energy was in use in the 1950’s to draw out water for irrigation purposes. It was a cheaper substitute to diesel driven pump-sets. National Windmill Demonstration Program was brought in by the Government of India as a part of the 6th Five Year Plan. These five year plans set economic goals and produced a blue print to achieve them. The program for windmill continued through the 7th Five Year Plan culminating in 1990. By then the country saw the installation of many 12 PU-500 wind pumps for shallow water pumping[3].

The Ministry of Non-Conventional Energy Sources (MNES) started a survey on wind resources in 1985. This wind date collection program was wide-ranging survey which took place in 25 Union Territories. The program included data collection on wind monitoring, wind mapping, and complex terrain projects. The wind resource potential calculated as a consequence of this study was 20, 000 MW[4].

After the survey the Government focused exclusively on grid-quality wind power and it opened up the market to private enterprises. As India experience liberalization at the exact same time, the wind energy industry found many successes. The private sector invested heavily and by March 1998, of the 968 MW of installed capacity, 95% had come from industries, entrepreneurs and businessmen. The sector saw a rise of 6% of new generating capacity between 1993 and 1997[5].

The Ministry of New and Renewable Energy (MNrE) has successfully increased the share of renewable sources of energy in contributing to the gross national electricity requirement. When the 10th Five years Plan began in 2002, the share of renewable sources of energy in the national capacity was a paltry 2%. Today it has increased to 10.9% with the total installed capacity being 170 GW where wind energy contributes 13,065.78 MW of energy. The Global Wind Energy Outlook has predicted a huge growth in the wind energy scenario of India. By 2020, the industry could see 170,000 jobs, and with an investment totaling $10.4 billion per year, the entire wind capacity could be 65 GW. This will also save 173 million tons of CO2 emissions every year[6].

The CAGr (Compound Annual Growth Rate) in the capacity addition of Wind Turbine Generator (WTG) between 1992-2010 has been about 24.67%. In 1992, the total installed capacity was 41.3 MW which has now risen to 13,065.78 MW by 2010[7]

2. Governmental Policies

India’s policy in promoting wind energy has been largely independent of governmental policy. This helped the notorious India bureaucracy to have little to do with the industry. This hands-off take on the industry allowed the market players especially the local manufacturing industry to naturally emerge as companies came to India to fulfill local needs. It took India to less than ten years to leap-frog through the bureaucratic cycle and establish itself as a premiere wind energy market and consumer. This was possible primarily because of technical advances which were made early on by local companies using local products, making the country rich with market players which originally were not players in the industry[8].

During the 10th Five Year Plan (2002-2007), the Government exceeded expectations and its target by installing 5,426 Mw of wind power generation capacity as opposed to 2,200 Mw as planned[9]. The Government of India has an ambitious new electrification policy for the current plan, the 11th Five Year plan, ending in 2012. The focus is majorly on renewable sources of energy and wind energy, being one of the rapidly progressing sectors, find special mention in the plan with the largest capacity addition coming in the this sector. The total investment on the development of renewable energy is $15 billion, being raised from domestic private investors, concessional financing from specialized governmental agencies and multilateral financial institutions. With the market for renewable energy growing at 15% every year, the foreign investment is being estimated to be $3 billion. The policy and government involvement in this sector is not only evolving every year but the outlook is dynamic, thus giving assurance to the investors that their investment will get returns and encouraging growth rate[10]

The Government in 2009 introduced the Grid Based Incentive (GBI) Scheme for grid connected wind power projects along with 627 wind monitoring stations to carry out wind resource assessment[11]. The purpose and thought process behind GBI was to broaden the investor base by facilitating the entry of independent power producers (IPPs), thus attracting more FDI in wind power sector, providing a level playing field between various classes of investors an incentivize higher efficiencies and provide a framework for transitioning from investment based incentive to output based incentive. The Scheme applies to maximum capacity limit of 4000MW during reminder of 11th Five Year Plan (2007-2012). The scheme may continue after 2012 pending the Central Government’s assent[12]

3. Suzlon

The company that spearheads India’s wind energy potential is Suzlon. The Indian owned company has within a decade emerged as a global player and last year made its presence felt on the international platform after capturing 7.7% of the market share in global wind turbine sales. It holds a 52% and market leading stake in the wind turbine market in India where it develops and operates wind farms along with manufacturing turbines. The success of Suzlon, has in turn made a developing country like India a leader in advanced wind turbine technology[13].

The company, initially a family owned Textile Company diversified into wind turbine manufacturing in 1995 and then became incorporated. Funded by City Group and Chryscapital, it made it to the top ten wind turbine manufacturers within five years of its entry into the industry. In September 2005, when Suzlon went public, its equity shares were five times over-subscribed. It has its international headquarters in Aarhus, Denmark while its group headquarters is located in Pune, India. Suzlon’s growth model is similar to a popular global model where it keeps abreast with the latest innovation in the global wind turbine industry and then incorporates it in their own research and development. As it has developed a global network of subsidiaries, it maintains a tight grasp over intellectual rights to remain a leader in innovation[14].

4. Opportunities

With 404 million Indians without access to electricity, wind energy has its task cut out to become the leading renewable source of energy for the country. The possibilities of expansion are endless. As grid extension in rural areas is not often cost effective, thus, decentralized energy generation with small wind projects are the best solution for rural electrification[15].

The “Small Wind Energy and Hybrid Systems” programme initiated in 1994 by the MNrE is implemented through State Nodal Agencies (SNA) focused solely on small wind energy and hybrid systems. The objective of the programme is to develop technology and promote applications of water pumping windmills and aero-generators/wind-solar hybrid systems. Although the programme helped to promote awareness of small wind systems in India, it created interest only among select users and has yet to make a real impact. The implementation of the programme was extended in April 2010 to the fiscal year 2011-2012. The physical annual target was set to installed 500 kW aero-generator/wind-solar hybrid systems and 25 water pumping windmills with estimated financial budget of Rs. 50 million over 2010-2012[16].

Offshore Wind Energy

India’s potential in off shore wind power is undisputed. With large tracts of coastline the possibilities are endless. Off-shore wind development is expensive, about 1.5-2.5 times more expensive that onshore, it becomes difficult to deploy them in developing countries. At this moment only Europe has a presence in this sector with a total capacity of 3GW. Presently, the current average rated capacity of offshore wind turbines is 2.5 MW as compared to average onshore wind turbine capacity of 1.06 MW (BTM ApS, 2010). It should be noted that most of the 4-6 MW turbines currently in the testing or early deployment stage are designed for offshore operation. The onus is now on the Government of India to not only create an environment where the new technology can be deployed but with right policies make it a success[17].

The Center of Wind Energy Technology (C-WET) has announced an off shore project in the state of Tamil Nadu as a prospective case study. It has also announced a new technical feasibility study in the state of Gujarat in partnership with the Scottish Development International (SDI), the international economic development agency of Scotland[18]. The Oil and Natural Gas Corporation (ONGC)[19] along with Siemens, Areva, and GE, have announced their intention to tap into the fertile market of off-shore wind energy. The Tata Group[20], has presented a proposal to the state of Gujarat for an off-shore wind energy project in the state[21].

5. Barriers and Solutions

The low utilization of the country’s wind power potential so far is attributable to several factors, including lack of an appropriate regulatory framework to facilitate purchase of renewable energy from outside the host state, inadequate grid connectivity; high wheeling[22] and open access charges[23] in some states, delays in acquiring land and obtaining statutory clearances[24].

The Indian Government had predicted that the capacity of wind power based plant to be increased by 6000 Mw, but this addition still falls short of the 11th Five Year Plan. Though the MNRE had planned to add 10,500 Mw in the period between 2007-12, but the additional generation capacity will be relegated to 6000 Mw. This estimation is based on the policies and plans announced by the private and public sector along with the development on continuing projects. Land availability seems to be a huge issue. As there is shortage of land, developing wind farms takes a backseat[25].

Policy control is a big issue. In 2010, India installed a record 2.1 GW of new wind power capacity. Yet to continue on this scale regulatory policy needs to be consistent and strong.  This is a cause of worry because there is a multitude of regulatory bodies in India. The Central Electricity Regulatory Commission (CErC) and the State Electricity Regulatory Commission (RErC) in tandem cause confusion in policy making and execution. While the CErC determines the feed-in tariff of electricity produced by renewable energy, this pricing policy holds good only in the power and generation and distribution system on which CErC has control over and those which transmit power in the inter-state corridors. The SErC could on the other hand make a different feed-in tariff proposal which could be at a polar opposite of the one made by the CErC[26].  

Inadequate grid infrastructure is another key issue that needs to be addressed urgently. Across most of those states with significant wind potential, the grid does not have sufficient spare capacity to be able to evacuate ever increasing amount of wind power. As a result, the state distribution utilities are reluctant to accept more power and on a merit order basis prefer thermal power. Thus, there is an urgent need to augment the grid capacity and the regional Southern Grid needs to be connected with the rest of the country on a realtime basis. This requires better forecasting of power demand across the nation, and a modernization of the grid[27].

Off-shore wind energy also poses a tremendous capital and procedural problems. Wind energy accounts for about 10% of the country’s total power generation with installed capacity of 16,000 Mw and is a promising sector with growth poised to double in the next five years. Though off-shore wind turbines deliver 50% higher plan load factor because of higher wind speed at sea, the cost of tapping power is 50% higher than on-shore wind turbines per Mw. Red tapism, bureaucracy and the debt ridden state distribution system does not help the cause[28].

There is heavy load on the wind turbine manufacturing industry which has to deal with the severe time crunch to supply components to the projects. With continued expansion in the industry manufacturing capacity needs to improve and increase. The solution lies in establishing several small to medium enterprises with subsidies. This will reduce the strain on the large manufacturing plants and not let the quality dip[29].

As the industry expands, there is a requirement for trained officials who could join the industry as technicians. This necessity demands a change in the academic curriculum of the technical colleges of the country. The Indian Wind Turbine Manufacturers Association, has thus started a pilot project of training students in local technical and engineering colleges towards employment in this industry. How successful this project will be will set the road map for further expansion of this program across other technical and engineering schools in India. Attached to this issue is also of lack of land for wind farms. With corruption on a rise in issues of land grabbing and unfair compensation of land being taken from farmers, wind farms find it difficult to set shop. The Government must work towards creating a proper legislation and execution machinery where land could be taken within the parameters of the law and fair and just compensation being given in exchange. Without a just mechanism, forest and tribal land is also being acquired to convert them into wind farms. At the same time if land is lawfully obtained, the Government must create a quicker process to convert its use from agricultural to non-agricultural[30]

Conclusion

India’s electricity shortage peaked at 12% in 2009-10. Experts are estimating that the between peak hours of 5 pm to 11 pm, the shortage might outstrip the given figure of 12%[31]. With an ever increasing population and the economic development which the country saw in the face of the global crisis, has further pushed the demand. Wind energy provides for an excellent option to not only meet this shortfall but also contribute to the National Electricity policy target of “Electricity for all by 2012”. As the gestation period of wind energy is shorter than nuclear or coal fired power plants and thus returns are not only environmentally sound, they seem to be financially feasible. Additionally, India has commitments under UNFCCC as well as the National Action Plan on Climate Change of Government of India[32]. This gives the Government onus to build on the promises of its policies. Energy security in increasingly energy hungry world is the key to which wine energy could be a possible solution. With abundant natural resources at our disposal, it would only be natural for the country to gravitate towards wind energy to fulfill the energy demands, while reducing the country’s carbon foot print and improving the environment of the country.

- By Sayan Das

About Sayan: Sayan is currently an LL.M student at Pace University School of Law.  Sayan received his Bachelors in Law from the University of Pune, India.  His LinkedIn profile can be accessed at http://in.linkedin.com/pub/sayan-supratim-das/37/265/856.


[1]The Use of Wind Energy in India – Lessons learned- Victor K. Mallet http://web.mit.edu/10.391J/www/proceedings/Wind-India_Mallet2001.pdf
Last Visited 13th March, 2012

[2] World Wind Energy Report 2010 -http://www.wwindea.org/home/images/stories/pdfs/worldwindenergyreport2010_s.pdf
Last Visited on 11th March, 2012

[3] 4 The Use of Wind Energy in India – Lessons learned- Victor K. Mallet http://web.mit.edu/10.391J/www/proceedings/Wind-India_Mallet2001.pdf
Last Visited 13th March, 2012

[5] The Use of Wind Energy in India – Lessons learned- Victor K. Mallet http://web.mit.edu/10.391J/www/proceedings/Wind-India_Mallet2001.pdf Last Visited 13th March, 2012

[6] Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf Last Visited 15th March, 2012

[7] Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf Last Visited 15th March, 2012

[8] A Comparison of Wind Power Industry Development Strategies in Spain, India and China by Joanna I. Lewis- http://www.resource-solutions.org/lib/librarypdfs/Lewis.Wind.Industry.Development.India.Spain.China.July.2007.pdfLast Visited 16th March

[9] India to add 6,000 mw wind power by 2012; but below target- 

[10] Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf
Last Visited 15th March, 2012

[11] 14.55 GW of wind installed in India, 627 monitoring stations established to harness potential- http://panchabuta.com/2011/08/07/14-55-gw-of-wind-installed-in-india-627-monitoring-stations-established-to-harness-potential/ Last Visited 16th March

[12] Generation Based incentives for Wind Power Projects Beyond 2012- http://agneyablog.wordpress.com/2011/02/21/generation-based-incentives-for-wind-power-projects-beyond-2012/ Last Visited 16th March

[13]A Comparison of Wind Power Industry Development Strategies in Spain, India and China by Joanna I. Lewis- http://www.resource-solutions.org/lib/librarypdfs/Lewis.Wind.Industry.Development.India.Spain.China.July.2007.pdfLast Visited 16th March

[14] A Comparison of Wind Power Industry Development Strategies in Spain, India and China by Joanna I. Lewis- http://www.resource-solutions.org/lib/librarypdfs/Lewis.Wind.Industry.Development.India.Spain.China.July.2007.pdfLast Visited 16th March

[15] 16 Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf Last Visited 15th March, 2012

 [17] Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf Last Visited 15th March, 2012

[18] India explores offshore wind energy potential-  http://panchabuta.com/2012/03/04/india-explores-offshore-wind-energy-potential/ Last Visited 16th March

[19] ONGC is a state owned oil and gas company in India. It has its headquarters in New Delhi. It is one of Asia’s largest oil and gas exploration and production company, accounting for 77% of India’s total crude oil production and 81% of the natural gas production. If measured by profit it is the largest Indian company and is a publicly traded company.

[20] The Tata Group is a publicly listed Indian multinational company with interests in communications and information technology, engineering, materials, services, energy, consumer products and chemicals. Its headquarters is in Mumbai and is one of the largest conglomerates in the country. Its operations run in 80 countries, comprising of 114 companies and subsidiaries in 8 business sectors.

[21] 24 Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf Last Visited 15th March, 2012

[22] Wheeling charges: An amount charged by one electrical system to transmit the energy of, and for, another system or systems.

[23] Open access: In the Electricity Act, 2003 it is defined as the “non-discriminatory provision for the use of transmission lines or distribution system or an associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission”

[25] 26 27 India to add 6,000 mw wind power by 2012; but below target-  http://www.business-standard.com/india/storypage.php?tp=on&autono=44562 Last Visited 16th March

[28] Offshore wind energy: Industry sceptical about high costs & cumbersome procedures- http://articles.economictimes.indiatimes.com/2012-02-25/news/31099921_1_offshore-wind-wind-energy-offshore-turbines

Offshore wind energy: Industry sceptical about high costs & cumbersome procedures in India-http://panchabuta.com/2012/02/28/offshore-wind-energy-industry-sceptical-about-high-costs-cumbersome-procedures-in-india/
Last Visited 16th March

[29] Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf Last Visited 15th March, 2012

[30] 32 Indian Wind Energy Outlook 2011- http://www.indianwindpower.com/pdf/iweo_2011_lowres.pdf
Last Visited 15th March, 2012

[31] India has 12% power shortage, figure may get higher: experts- http://www.livemint.com/2009/05/05005836/India-has-12-power-shortage.html Last Visited 15th March, 2012

 

A 9 STEP GUIDE TO NAVIGATING ITALIAN PRODUCT LIABILITY LAW

To most of us, product liability is straightforward… Either pursue a strict liability claim, a negligence claim, or a breach of warranty claim.  But navigating a civil law system is both confusing and may not come naturally to U.S. businesses.  Read here to learn more!

(Disclaimer: This post is long and provides detailed information for a reason – we want you to come out knowing everything you need about the a) the Italian legal system b) a civil law system)

 1) Sources of Law Governing Product Liability:

In Italy, the tort and contract sections of the Civil Code and the Consumer Code govern product liability. Essentially two different liability approaches coexist in our system:

  • A traditional, fault-based tort liability regime and
  • A “new”, strict product liability regime.

The fault-based approach is the oldest and it based on section 2043 of the Italian Civil Code that provides a general torts clause. Under this approach a consumer can sue a manufacturer for damages caused by defective product even without a direct contractual relationship but the burden of proof he must bear is very demanding (as explained in point 5).

“Strict Liability” Approach:

A more favorable approach to the consumer/victim is provided by section 2050 of the Italian Civil Code in case of dangerous activities. Said section states that whoever injuries another in carrying out an activities which is dangerous per se is liable for damages unless he proves that he adopted all possible measures to avoid the damage. 

The Consumer Code introduced a strict product liability regime and it shifted the burden of proof to the manufacturer. Indeed, unlike the tort liability, the consumer doesn’t need to prove the manufacturer’s fault. Due to the strict liability regime actions brought under the Consumer Code became more and more frequent.

2) Procedural structure and hurdles: EVERYTHING YOU NEED TO KNOW

What is the structure of the civil court system? What are the main pleadings filed by the plaintiff/defendant? Are there specific rules set for a product liability action?

In Italy there are 3 levels of courts: trial court, court of appeal and Court of Cassation. The Italian civil proceedings are governed by a single judge or, in a second-instance courts and in the court of last resort (Court of Cassation), by a panel of judges. Unlike common law tradition, Italy does not contemplate trial by jury (a jury is required only in few specific criminal cases).

A case starts with the plaintiff’s complaint, which states all the claims against the defendant and all the facts and points of law supporting his claims. A plaintiff may also include the evidentiary means that he/she intends to submit to the court in his first pleading but, as we will see below, the claimant may also submit the request for evidence after the first hearing. The defendant’s answer is similar to the plaintiff’s pleading; it needs to contain any defense arguments (facts and points of law) and means of evidence (if he/she does not decide to postpone the latter after the first hearing). This differs slightly from the requirements of a defendant in a typical U.S. civil case.

A trial can generally be divided into three phases:

  • introductory phase, in which the judge takes care of the formal and procedural regularity of the proceedings and decides which evidence to admit to the trial;
  • evidentiary phase, in which witnesses are examined by the judge and experts, if appointed, render their written opinions; and
  • decision phase, in which the judge evaluates the evidence, the experts written opinion and the closing arguments of the parties to reach the final decision.

A product liability action is governed by the same rules as are set for ordinary proceedings by the Code of Civil Procedure.

3) Class Action:  

Is there any class/group action available to product liability claimants?

The class action in Italy has been introduced by the Law No. 99/2009, section 49 which modified section 140-bis of the Consumer Code. The class action became effective on January 1, 2010.

On one hand the Italian class action presents some similarities with a US class action, such as the commonality and typicality requirements and the role and obligations of the representatives. On the other hand our class action does not need the “numerosity” requirement [US Federal Rule 23(a)(1) i.e. a requirement that the class be so numerous that joinder of all members as individual named parties be “impracticable”].

Section 140-bis, 2nd period, describes the cases in which class action treatment will be permitted.

The procedural structure presents some differences in regard to an ordinary civil proceeding. Indeed in a class action suit the plaintiff is also required to notify the pleading to the public prosecutor. The first hearing represents the center of all the proceeding since the judge must decide how and if to proceed. He/she can be denied certification of the class only if:

  • the consumers’ claims are clearly without any basis;
  • there is a conflict of interests;
  • the consumers’ claims (questions of law) are outside of the provisions states in section 140-bis, 2nd period and
  • the representative party is not able to fairly and adequately protect the interests of the class.

After having certified the class the judge must decide the best way to notice the potential members of the class and to proceed with the case.

The final decision is binding for all the members of the class.

4) Possible respondents:

Who can be held responsible for a defective product between a manufacturer, an importer, the distributor, and the supplier?

The basic rule is that the manufacturer, as defined by section 115 of the Consumer Code, shall be liable for damages caused by its products. Suppliers may also be held liable but only in the event that the manufacturer is not been identified. Nevertheless a supplier can avoid liability by allowing the identification of the manufacturer.

5) Burden of proof in a product liability action:

Does the Consumer Code soften the burden of proof for the consumer?

Yes, it does. Normally in a tort action, under section 2043 of the Civil Code, a plaintiff must prove:

  1. the defect of the product;
  2. the damages suffered;
  3. the causality (in other words, the plaintiff must prove the nexus between defect and damage under probabilistic criteria) and
  4. negligence or willfulness of the manufacturer.

On the contrary the Consumer Code is based on a strict product liability regime and it shifts the burden of proof to the defendant (manufacturer, distributor, etc). Indeed section 120 of the Consumer Code does not require the plaintiff to prove point n. 4.

6) Defendant’s tools:

What are the possible defenses for a manufacturer?

According to section 118 of the Consumer Code a manufacturer may avoid liability if:

a. the manufacturer did not place the product on the market;

b. the defect that caused the damage did not exist when the manufacturer released the product onto the market;

c. the manufacturer did not manufacture the product for sale or any other form of distribution against payment of consideration, and did not manufacture or distribute the product in the exercise of his professional activity;

d. the defect depends on the compliance of the product with a mandatory legal rule or a binding measure;

e. the state of scientific and technical knowledge at the time when the product was released on the market did not allow the existence of the defect to be discovered; or

f. the manufacturer or supplier of a component part of the product fully complied with the instructions given by the manufacturer who used the component or the defect is fully due to the concept of the product in which the part was incorporated. 

There are two more circumstances that may avoid or reduce a manufacturer’s liabilities:

  1. the manufacturer may be held liable only if the product is defective in relation to its specific use; and
  2. according to section 122 of the Consumer Code:
    1.  if the consumer contributed to cause the injury or damage, the assessment of damages shall be reduced consequently and
    2. If the consumer was aware of the defect or of the danger of the product and nonetheless he/she decided to use the product and expose himself/herself to the risk no damages can be granted.

The Consumer Code (section 124) states that any clause that rules out or limits liability in advance shall be considered void.

7) Statute of limitations

Are there any time limits on seeking damages?

Yes, there is and it depends on what kind of legal path the plaintiff decides to follow.

If the action is based on tort provision, the status of limitation period is 5 years from the day the consumer became aware.  However, a contract liability action has a period of 10 years.

Under the Consumer Code (section 125) the limitation period is 3 years from the day on which the injured party becomes or should have become aware of the damage, the defect, and the identity of the liable party. In any case the consumer’s claim is barred after 10 years from the day on which the product was placed on the market (section 126).

8) Damages

What types of damage can be recovered by a plaintiff in Italy?

Unlike most of the common law countries, the Italian legal system does not contemplate punitive damages but only compensatory damages. Apart from that general principal the types of damages a petitioner may recover depends on whether the plaintiff sues under contract law, tort law or under the Consumer Code.

In the first case, the claimant may only recover material/economic damages resulting from a breach of contract such as actual damage and lost profit.

On the contrary under tort law the victim, in addition to material/economic damages, may recover moral damages. 

Under the Consumer Code (section 123) a plaintiff may recover:

  • the damage for injury to life or limb and
  • the destruction or deterioration of property other than the product itself, but only if the amount of damages exceeds euro 387. 

9) Final decision:

How long does it take to get a first instance decision?

The length of a product liability action depends on:

  • the complexity of the case and
  • the amount of evidentiary means offered by the parties and admitted by the Court.

Having a large number of witnesses or appointing one or more experts (called consulente tecnico  ’ufficio, CTU) may significantly lengthen the duration of a trial. Usually a civil proceeding lasts 3 years.

Tackling a foreign legal system is a daunting task especially when the legal system is based on principles that are unknown.  However, assessing a foreign legal system’s pros and cons prior to business entry is imperative. Use this guide to navigate the Italian legal system and watch this space to learn more about Italy.

- By Fabrizio De Fabritiis, Esq. with input from Anitha Cadambi, Esq.

About Fabrizio: Fabrizio is a lawyer from Milan, Italy. He received his LL.M from the University of California, Berkeley, School of Law (Boalt Hall). He can be reached at contedefa@gmail.com. Check his company website out at http://www.lawyer4italy.com/.
 

Entry to India: Legal Options Available

Often, residency and citizenship can be a deterrent to effectively investing in a foreign country. For many businessmen, wiggling through the endless list of regulations seems unnecessary and outright annoying. So, with the help of an Indian attorney friend, a simple explanation to entry routes available in India was put together. Read below to find out more:

A non-resident entity can invest or operate business in India, subject to the Foreign Direct Investment Policy, as an Indian Company or Foreign Company (subject to restricted activities).

I. As an Indian company: 

A foreign company can commence operations in India by incorporating a Company under the Companies Act, 1956, either as a wholly-owned subsidiary or through the formation of a joint venture with an Indian partner (of course finding a suitable joint venture partner after a thorough due diligence is both essential and a key aspect to your future business success).

(i) Joint Venture With An Indian Partner

Foreign Companies can set up their operations in India by forging strategic alliances with Indian partners.

Joint Venture may entail the following advantages for a foreign investor: (All of which should be questions you include during your due diligence process in selecting a suitable joint venture partner.)

  • Established distribution/ marketing set up of the Indian partner
  • Available financial resource of the Indian partners
  • Established contacts of the Indian partners which help smoothen the process of setting up of operations
Note: For a U.S. business, in addition to these advantages, you should consider the ease at which an FCPA compliance program with your JV partner can be implemented.

II. As A Foreign Company: 

Foreign companies can also set up wholly-owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.

Foreign equity in wholly-owned subsidiaries can be up to 100 per cent, subject to equity caps in respect to the area of activities under the foreign direct investment (FDI) policy. http://www.fipbindia.com/FDI_Circular_02_2011.pdf

As a foreign company: Foreign companies can operate in India through the following:

  • Liaison office
  • Project office
  • Branch office

Such offices can undertake permitted activities after registering with the Registrar of Companies (ROC) within 30 days of setting up a place of business in India.

FDI policy lays down two routes:

Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from Government of India for the investment. However, the foreign company needs to inform the RBI within 30 days of receipt of inward remittances in the bank account of the Indian company and in the case of issue of shares to non-residents. The RBI has prescribed a new form, Form FC-GPR (instead of the earlier FC-RBI), for reporting issue of shares to foreign investors by an Indian company

Under the Government Route, prior approval of the Government of India is required. Proposals for foreign investment under Government route, are considered by FIPB.

 There are certain business sectors where FDI is not permitted at all, namely:

(a) Retail trading (except single brand product retailing)

(b) Atomic energy

(c) Lottery business including government/private lottery, online lotteries, etc.

(d) Gambling and betting, including casinos, etc.

(e) Business of chit fund

(f)  Nidhi company

(g) Trading in transferable development rights (TDRs)

(h) Real estate business or construction of farmhouses

(i) Activities/sectors not opened to private sector investment

(j) Agriculture (excluding floriculture, horticulture, development of seeds, animal husbandry, pisciculture and cultivation of vegetables, mushrooms, etc., under controlled conditions and services related to agro and allied sectors) and plantations (other than tea plantations)

(k) Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes

Besides the entry conditions on foreign investment, the investment/investors are required to comply with all relevant sectoral laws, regulations, rules, security conditions, and state/ local laws/ regulations.

….. If there is anything you want to take away from this post, it is the following information: 

Step-by-step process to start business in India:

  1. Study of the RBI master circulars/FEMA regulations and the FDI policy – to identify the route of entry, sectoral caps and permissions required.
  2. Take DIN and DSCs
  3. To file forms for name availability
  4. To draft MoA & other documents
  5. To file papers for company formation (i.e. MoA), Directors and address of business
  6. File form with RBI

- By Lolita Fernandes with input from Anitha Cadambi, Esq.

About Lolita: Lolita Fernandes received her Bachelor of Law degree in 2008 from the University of Mumbai, India, where she also completed a Master of Law degree with a specialization in criminal law. She is admitted to practice law in India.  She worked as an in-house counsel in India until June 2010 and much of her work focused on drafting and vetting business contracts, commercial agreements, loan documentation and rendering advice on compliance and regulatory related matters. She graduated from University of Southern California, Gould School of Law with a LLM degree in May, 2011.  Currently, she is working as a volunteer legal intern at the Eviction Defense Collaborative, a non-profit legal services clinic counseling tenants facing eviction. (http://www.linkedin.com/in/lolitafernandes)

India, Hot Dogs, & What To Expect: My Interview With Your Future Competitor

I sincerely believe that no advice serves better than advice from the ground. Having said that, today’s post contains information I put together with the help of a young entrepreneur from India. The entrepreneur in question runs a very successful hot dog business called Hungry Hogs (www.hungryhogs.comin Bangalore, India.

I. Hot Dogs outside of the U.S.? You would be surprised by their popularity!

As one of Hungry Hogs’ founding member pointed out – “We realized from the inception that our biggest hurdle would be selling a relatively unknown product and that we were an unknown brand. People might have heard about hot dogs, but were either unimpressed with what other places had to offer or preferred something else to hotdogs.”

So they did what any other smart entrepreneur would do – “We carried big blown up photos of hot dogs wherever we set up our stalls and when people asked us what hot dogs were, we just pointed to our photos and then continued to explain the concept to them in more detail. In all honesty, it is still easier now to sell popular western products as people are more exposed to them than 10 years ago . People have already included burgers, pizzas, and pastas to their regular diets. The fact that hot dogs weren’t in this category is what prompted us to get into hot dogs and hot dogs only. From day 1, we could honestly say that we served the best hot dogs in town! Often, industry experts though excited by our idea, advised us to add burgers to our menu, and some even told us to add coffee! But we remained adamant from the beginning to keep it simple, and that has helped us stay focused ever since.”

II. Start-Up Issues: What to Consider?

Initially, the idea behind Hungry Hogs was to have hot dog carts all over Bangalore. But as they began researching and talking to people, they realized that it wasn’t very feasible as they had initially anticipated. Instead, they decided to start off by catering only to college fests, concerts etc.

“It seemed to be a safe first step at that point of time. But in hindsight, it was a crucial move because it laid the groundwork for the diners we would eventually open.”

“Since our scope of operations were limited, getting capital wasn’t a problem. Legally, rules were laid out clearly for establishments like us. The only thing we weren’t too happy was with the fact that there are no clear rules covering vendors selling food on the street. A lot of the existing vendors could not get licenses even if they wanted to (another reason we decided against hot dog carts).”

One World South Asia (http://southasia.oneworld.net/fromthegrassroots/saving-the-street-vendors-of-incredible-india) touches on this point by saying:

The existing laws to support the rights of street vendors are weak. City planners and other civic authorities scrap laws that support vendors’ rights. Instead of spending money on civic amenities, improving drainage, sewerage systems and garbage disposal facilities, they shift the blame for shortages of services onto vendors and migrants. They brand them a civic nuisance and actively encourage the police to evict them. Even when the rules are in favor of the vendors, lack of operative-level transparency plays havoc with their livelihoods. The harassment by various authorities, local bodies and departments, and the exploitative fees paid in bribes to those who exploit the loopholes in the system, leads them to destitution. This, in its worst form, takes the shape of eviction and a complete loss of working capital. Instead, regularizing their activities in a manner that gives opportunities for relocation would be a better option.

But as profoundly pointed out by Hungry Hogs’ founding member:

“So I guess the difficulties we faced initially were business related, but by starting small we feel we bypassed legal and financial issues that otherwise would have proven to be problematic.”

III. Growing your business might not be as easy as starting one!

“The upside and sometimes annoying fact about start-ups is that every day throws a new challenge — some are exciting, some are, for the lack of a better word, extremely challenging, some feel like they’re downright unnecessary (they aren’t). I guess the biggest challenge though, even now, is to maintain quality and consistency in the food as well as service throughout all our outlets/diners.”

“Once we started our diner though, our approach was totally different. We were (still are) already the only place serving specialty hot dogs. Our food was (still is) pretty delicious, and the rates were (still are) easily affordable. But what we set out to do was to ensure that anyone walking into our diner would have a good time. And I feel that’s what sets us apart. You walk into any Hungry Hog diner, you’re more likely to be met with a “Hey, What’s up (first name)” than a “Good evening Sir/Madam, welcome to Hungry Hogs, May I take your order”. We know most of our customers by face; we know what they like to order and also the little tweaks to their orders.”

Biggest Challenge: Transitioning from Self-employed to An Employer

One thing common among all start ups is that the founders always seem to have this extreme passion which to the uninitiated borders on, insane behavior! So the challenge was to get everyone on the same page and showing the same energy/enthusiasm/passion.”

Have you ever questioned your age or lack of experience?

“It was hard not to. Wherever we went we were reminded that we were young, not as if we were oblivious to it, but we were confident that we had what it takes. But we considered our lack of experience as bringing a certain sense of freshness to our venture. Nonetheless, it hasn’t been a walk in the park, and obviously there are days when we feel we’re too young to be in this Food & Beverage industry. But being young is what gives us an edge as well as helps us connect to a growing middle class, a category made up of people largely in our own age group. So as long as being young has more advantages than disadvantages, we are not bothered by it.”

A Tribute To The Girl Scouts of America

100 years is no joke. The only reason I know that the Girls Scouts of America are celebrating their 100 year anniversary is because my 14 year old cousin happens to be participating in their anniversary celebration. Looking back, I wish I did more than just fill my pinafore with badges when I was a girl scout. To add to my misery, I was all of 6 or 7 when I started off as a daisy that now the only way to piece back those memories is through my badged pinafore that I proudly hold on to.

Being fascinated by everything business, picking the Girls Scouts, a non-profit doesn’t seem right! But if you are business owner and are looking to run a successful business, here is what you can learn from the Girl Scouts:

1. Thin Mints : Every bite brings pure joy to my world

Sure, the girls scouts has a variety of cookie brands but those thin mints sure are good! I wonder who bagged the coveted cookie supplier role – whoever you are, if you see this, write back – I want to know how you managed to win that contract.

What separates this cookie supplier from all the rest – they gave us the best darn cookies that ever existed. Add a cute saleswoman to the mix – it’s win – win. I don’t think I have ever said no to a girl scout selling me cookies! (I just bought the cookies and then increased my gym payments to include personal training!) This is a lesson in good selling! Thank you Girl Scouts.

2. Unique Charity Ideas

It’s the uniqueness of the Girl Scout’s charitable endeavors that are sooo impressive. Take their 100 year anniversary project – they created something called “birthday in a box”. What does that entail? You create a box of goodies and party supplies for one birthday boy or girl. It’s soo much fun to make these boxes – as I write this post, my family and I just finished putting 18 boxes together.

From a business perspective – I would start a “birthday in a box” business. Think about it, create boxes of ‘to go birthday supplies’. As a parent, you know the pains of birthday shopping, especially when it is last minute. Here, you can just call in – someone will do all the running around and boom – you have a birthday in a box! (Now do I need to patent, trademark or copyright this idea? Oh that’s right ideas can’t be protected. Let me call my bank really quickly!!)

3. Future Business Leaders of America

Look no further for a lesson in leadership than to the Girl Scouts. I recently read a story where two girl scouts were selling cookies on a street corner and a man actually had the audacity to walk up to their table and run away with their money jar. But kid me not (pun intended), these two girls ran after him….caught him and got their money jar back. What I learnt from these girls – Fearlessness, Dedication and to never mess with a Woman Leader. Business 101 guys!!

To 100 more years! (PS: Go grab your thin mints – I hear they are running out and I might have something to do with it!!)

http://www.girlscouts.org/who_we_are/