India Arbitration Update

Author:Mr Peter Godwin, David Gilmore, Christopher Hunt, Emma Kratochvilova, Elaine Wong, Bree Farrugia, Ben Jolley and Vikram Shah
Profession:Herbert Smith Freehills

As both government and business in India continue to encourage Japanese investors to participate in the country's growth story, this newsletter contains a high-level update regarding various arbitration related developments.

For clients currently engaged, or looking to do business, in India, there are complex legal and regulatory frameworks, dispute resolution and management considerations. This month's newsletter will cover the following topics:

Courts' refusal to intervene in ongoing or potential foreign-seated arbitrations; Award enforcement challenges faced by foreign counterparties; India's re-negotiation of its Bilateral Investment Treaties (BITs); and The launch of the Mumbai Centre for International Arbitration (MCIA). Courts' refusal to intervene in arbitrations

Challenges to enforcement of foreign awards in Indian courts

India initiates re-negotiation of Bilateral Investment Treaties (BITs) based on Model BIT

India's first centre for international arbitration launched in Mumbai


Courts' refusal to intervene in arbitrations

Over the last few years, the Indian judiciary has shown a reluctance to intervene in situations where the parties have agreed on foreign-seated arbitrations applying foreign arbitral procedural law. This trend is an encouraging one for foreign counterparties, given the real concern that Indian courts were quick to exercise supervisory jurisdiction over foreign-seated arbitrations, simply because one of the counterparties was Indian or the substantive contractual agreement was governed by Indian law.1

The trend towards a more arbitration-friendly India began with the September 2012 decision in BALCO/Kaiser Aluminium ("BALCO I")2 and can be further illustrated by the following:

In 2015, a division bench of the Delhi High Court overruled a single judge of the same court and refused to grant an anti-arbitration injunction to the local partner of McDonald's, Mr. Vikram Bakshi. Mr. Bakshi was seeking to halt the proceedings of a London Court of International Arbitration (LCIA) arbitration initiated by McDonald's in connection with a dispute concerning its right to acquire Mr. Bakshi's share in the joint venture. Notably, the division bench clarified that Mr. Bakshi's argument of London being a forum non conveniens (on the basis that the dispute involved Indian parties and that Indian law governed the joint venture agreement) would not hold good. The Supreme Court has since upheld this judgment.3 In...

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