Understanding Litigation Process in India for Foreign Investors

INTRODUCTION

India follows the common law principles, and its legal foundation is adapted from British system of jurisprudence. The codified laws have a uniform system throughout the country with the Supreme Court being at the apex Court and a High Court at the State level.

With a rise in Foreign Direct Investments in India and a structural and systematic approach in India, it has become a norm for parties to enter into a written documents such as a contract or an agreement before entering into any transaction. The contract is well drafted and the terms and conditions are strictly stated by qualified professionals taking into consideration all the legal and financial aspects of the relevant laws. Thus, the probability of the agreement being challenged becomes narrow. However, on account any such circumstances, where the contract is challenged, there is robust Indian legal systems that provides for an effective and transparent method to implement justice.

THE PROCEDURE

A legal entity incorporated in India such as a company, LLP or a sole proprietorship can in its ordinary sense sue another individual or legal entity, also an individual foreign nationals, can sue against any individual or legal entity in a competent courts in India without any a prior permission of the government. Similarly, a foreigner can be sued under the Indian laws provided the cause of action , or a part of cause of action has arisen in India, or the Defendant (being the foreigner herein) is residing in India even if the cause of action has arisen outside India, thus making the Indian Court competent to have jurisdiction and proceed in such cases and pass the relevant order. You may looks for more information including the section as provided under the Code of Civil Procedure therein under at https://www.indiacode.nic.in/show-data?actid=AC_CEN_3_20_00051_190805_1523340333624§ionId=33420§ionno=83&orderno=87

However, despite having jurisdiction, the Indian Courts may refuse to entertain suits having foreign element, when there is a pre-existing contracts with pre-determined jurisdiction such as alternate dispute resolution to the likes of arbitration, etc. In certain circumstances Indian Courts in a particular case decline to entertain suits by applying the rule known as forum non conveniens.

In the event, where there is no such specific pre-determined jurisdiction mentioned in the Contracts, the parties will be required to follow the standard procedure as laid down under the Code of Civil Procedure, 1908. The technicalities of the said procedure differs on case to case basis, but however, on a broad spectrum, litigation in India begins with filling of the plaint and the summons to call upon the Defendant to appear before the Court. Once, the summons has been properly served and a copy of the plaint has been furnished to the Defendant, the Defendant has been granted 30 days to file their reply before the Indian Courts. Upon filling of the reply, the Courts would frame the main issues or contentions to the case and on the basis of these issues, the plaintiff shall be filling their evidences and defendant shall file their reply. Once all the documents have been filed including the evidence, the Court shall call upon the witnesses to testify the claim and thereafter the parties shall be permitted to furnish their final arguments in the said case. In order to adjudicate the case, the Court shall take into consideration the documents furnished, the testimony of the witness and the final argument of the parties.

In cases, where a contract stipulates for a pre-determined jurisdiction such as an arbitration clause in the contract where the parties either prefer for a domestic arbitration or an international arbitration in accordance with the arbitration clause in the agreement irrespective of the nationality of the parties. Both domestic and international arbitration shall be governed under the Arbitration and Conciliation Act, 1996. The Act can enforce arbitration proceedings relating to domestic and international commercial arbitration conducted in India, as well as reference of foreign awards.

In cases, where the parties choose for resolving the dispute through an international arbitration centers located at Singapore, London, Hongkong, Geneva, New York, Shanghai etc. it is essential that the foreign investor should incorporate the rules of such international arbitration institution in their arbitration agreements.

Conclusion

Thus, it is pertinent to note that the investments are in accordance with the Indian legal framework and comply with the Indian laws. Hence domestic awards and foreign awards under the New York Convention and the Geneva Protocol are enforceable in India as if they were decrees of an Indian Court. However, non-convention foreign awards are not enforceable in India.

Disclaimer：

The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.

We at D’Andrea & Partners Legal Counsel are a legal firm with its presence in India, Pune and provide all round legal and fiscal services relating to open a company in India, legal compliance, litigation and dispute resolution, drafting of agreements and contracts, intellectual property rights protections, HR and IPR Related work and other miscellaneous services. Should you have any query or wish to know more, please reach us at info@dandreapartners.com. We are also pleased to introduce our practical guide on Foreign Direct Investment in India which you can purchase on https://www.amazon.com/Foreign-Direct-Investment-India-Invest-ebook/dp/B0BP7M7GKD/ref=sr_1_3?qid=1695004259&refinements=p_27%3ACarlo+Diego+D%27Andrea&s=digital-text&sr=1 3&text=Carlo+Diego+D%27Andrea