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Drafts are to be based on considering likely disputes, prevailing situation and laws: –
In the case of an offshore outsourcing transaction, the enforcement of customer’s rights and remedies with respect to the agreement has always been a vital concern. In the case of India, it is extremely important that dispute resolution and governing law clauses are perfectly tailored to reflect the nuances of the legal system in India. It may be noted that model form clauses effective in other jurisdictions will not work efficiently in the Indian context. Now since, a party to an agreement related to India containing non-Indian specific dispute settlement clause may find himself in a position contrary to his expectations entangled in litigation before the Indian judiciary. In order to do away the trouble, it is important that a contract is properly drafted considering the likely disputes, given situation and the applicable laws.
Offshore arbitration- Best suited & Limitations of Litigation (onshore/offshore) & Arbitration: –
One of the essential principle’s for drafting an agreement for offshore outsourcing with proper legal framework is agreeing to offshore arbitration where possible. Offshore arbitration happens to be the best suited option for dispute resolution. Interestingly, both litigation (onshore/offshore) and onshore arbitration are generally not advisable. Starting with litigation, which is generally not good option in India. Notwithstanding that fact that, out judiciary is professional and independent, delays are inevitable and as long as ten years or more in getting the final verdict. Coming to Offshore litigation, which is preferable to onshore litigation highly depending on the chosen court, parties to the agreement are likely to face difficulties like, enforcing foreign jurisdiction clauses and further ensuring that judgements delivered in abroad are recognised and enforced in India. However, Indian judiciary do not take into consideration exclusive jurisdiction clauses to be determinative at all. But, certain “decrees” pronounced by top courts in few nations recognised as, “reciprocating territories” are enforceable under the Indian legal system. It may be noted that among the twelve recognised territories, England and Singapore are the common most offshore jurisdiction. Under the Code of Civil Procedure, enforcement of a judgement pronounced abroad would be refused in India, if the same has not been pronounced by a competent jurisdiction, the judgement was not delivered on the merits of the matter, the matter was founded on the incorrect perspective of the International law, or the court has failed to recognise the Indian Law, where it was necessary, the judgement was obtained on fraud, or a the proceeding giving rise to the judgement was founded on principles against natural justice.
Onshore Arbitration & Conclusion: –
Lastly, we have the facility of arbitration in India, or simply onshore arbitration which is considered a better choice than litigation before the judiciary. However, there are number of shortcomings when compared to the standard and accept version of international arbitration. It may be noted that onshore arbitration is vulnerable to excessive intervention by the Indian judiciary. However, in ONGC v. Saw Pipes, Appeal (Civil) 7419/2001, the Supreme Court of India had given an expansive interpretation to the word, “public policy” by ensuring to reopen onshore arbitral awards. On the Contrast we have offshore arbitration provides us an unbiased forum for the settlement of disputes and is the most preferred form of dispute resolution by both Indian and abroad parties. It may be noted that Indian judiciary generally reveres and enforces clauses providing for offshore arbitration.
Authored By: Adv. Anant Sharma & Aniket Pandey