This is Part 1 of a 2 part series blog which shall cover the problems plaguing the Esports arena and a detailed analysis of the South Korean gaming laws, which need to be inculcated in the Indian Esport legal diaspora to better regulate the booming field.

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BACKGROUND

2021 was a significant year for the field of e-sports in India. Despite the prolonged ban on its most famous e-sports- PUBG MOBILE, the Indian e-sports industry grew exponentially from almost INR 3 billion in FY 2021 to an expected INR 11 billion in FY 2025. In the meanwhile, PC games like Valorant had already gotten the push they needed to become popular in the Indian e-sports arena. One of the most intriguing things about this is that the community and streamers switched their focus from other mobile games to the newest PC games, such as Warzone, Apex Legends, and Valorant.

Lockdown, among other limitations, brought on by the pandemic prevented the nation from holding any significant offline events. However, bane turned into a boon for online digital gaming; it led to a sharp rise in online viewing and many influential brands entered the market with a range of capital offerings.

In such a scenario, it is pertinent to be aware of the regulatory provisions dealing with the field of Esports and the severe dearth of protection offered to Esports athletes in India. In this series, Part 1 discusses specifically the contractual issues plaguing this field and how South Korea deals with the same.

INTRODUCTION

Electronic Sports ("Esports") has been one of the most popular topics in the world of Intellectual Property for a while. Its growth has been phenomenal, coming in cycles and largely influenced by global trends, technological advancement and access to high-speed internet. While there is no doubt as to the bright future of the gaming industry, specifically the Esports sector, the tremendous growth and progress accompanied by unique characteristics led to a range of legal and ethical issues. To deal with such issues, a law is a necessity.

Indian & South Korean athletes have always been in pole positions, South Korea being ahead in digital gaming, especially Esports. However, there is a stark contrast in the digital gaming regime of both these countries. While India doesn't have any specific law on Esports, barring a few state legislation provisions, South Korea is miles ahead, having strict laws on various elements of digital gaming along with a Game Industry Promotion Act. In this article, we would be comparing India & South Korea's laws pertaining to Esports & Digital gaming and would be analysing why South Korean legal provisions on digital gaming should become a cornerstone for India's gaming regime.

REGULATORY LANDSCAPE

Contractual & Labour Issues in Esports

India

Generally, professional esports athletes are offered to join a team (in sporting terms, a clan) in order to participate in an esports tournament. The clan provides the athlete with a joining bonus, compensation and other benefits similar to an employment contract. Clauses like duration, remuneration, working conditions, duties and liabilities of both parties are stipulated within the agreement. However, in case of any dispute, there is no accurate framework for dispute resolution in sports and hence there is a lack of contractual stability. In particular, the enforceability of a majority of agreements between clans and athletes is a major legal issue.

  • In India, contracts are governed under the Indian Contract Act, 1872 ("ICA"). Most of the esports players, as claimed by the Esports Player Welfare Association of India (EPWA) are below the age of 18 and are not aware of how contract law works. They frequently end up agreeing to unfavourable contractual provisions because they lack the resources and negotiating power to resolve the power disparity among themselves, Esports teams, and game publishers. According to Section 11(4) of ICA, a minor is incompetent to contract and a contract with a minor is void ab initio. In the landmark judgment of Mohri Bibi v. Dharmodas Ghose1, it was laid down by the court that any contract entered into by a minor is void ab initio and the doctrine of restitution is unenforceable in this scenario.
  • Moreover, most esports contracts involve a non-compete clause which restrains the athlete to have engagements with other teams during the course of the agreement and beyond. The non-compete clause and predatory contracts somehow violate Section 27 of the Contract Act which stipulates that restraining a person from practising their trade would be void and not voidable.
  • Also, most Indian esports athletes ignore the roster management clause that should be included in their contract if they want protection from prolonged benching by their respective team or clan managers. In the case of V.F.S. Global Services Ltd. v. Mr. S Roy 20082 The Bombay High Court stated that if there is a prolonged benching by a team of its player(s) without specifying any reasons as to the same, then that would be considered as a restraint of trade and a valid reason for termination of the contract.
  • In August 2021, the Esports Player Welfare Association (EPWA) was launched as a non-profit organization in India. Its primary aim was to safeguard the rights and interests of esports players and organizations. However, there is no legal backing for EPWA. No law regulates such associations working towards the betterment of esports athletes and this is one of the key reasons why India lags behind in terms of Esports Governance.

South Korea

In South Korea, the Korean Esports Association ("KeSPA") was established by the Government and was recognised as a branch under the Ministry of Culture, Sports & Tourism. It regulates esports tournaments and distributes broadcasting licenses to TV Channels. Unlike Indian ESFI, this body was regulated and its rules and regulations were binding on all esports athletes, teams and organizations.

  • The KeSPA established a system of pro-gaming license system to enable esports athletes to participate in esports tournaments.
  • In 2014, the KeSPA announced a minimum salary structure, roughly USD 20000 over a period of one year so that esports athletes are not exploited and get paid the minimum due. Furthermore, a minimum contractual period of one year was announced beginning in 2016, so that the athletes are not left hanging in the middle of a year without any wages and a team to play for. However, there was still a lack of a proper format of a contract between athletes and the organizations.
  • Finally, after months of discussions, in September 2020, the Ministry of Culture, Sports & Tourism (South Korea) announced three standard contracts - the Esports Player Standard Contract, the Esports Trainee Standard Contract & Teenage Esports Player Standard Affiliated Agreement in order to protect player rights.
  • The contracts contain provisions regarding minimum salary, working/playing hours, performance-linked bonus, loan and benching provisions. This creates a transparent and safe work environment for players of all age categories.

In Part 2 of this series, we shall analyse the malpractices prevalent in the Esports arena and the provisions aiding in the prevention of the same with regard to South Korean Esport Laws.

Footnotes

1. (1903) ILR30 Cal539 (PC)

2. (2) BomCR 446 (India)

Author: Garima Chauhan, Swayam Samarth, and Bhavishya are currently doing internship at Khurana & Khurana, Advocates and IP Attorney.

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