top of page

India Group newsletter - Disputes Focus

Avoiding and managing disputes in an international supply chain

(Duncan Gorst, Senior Associate - Osborne Clarke Germany & Kanwar Vivswan, Associate - Osborne Clarke, Germany)

Disputes frequently arise between manufacturers and their customers. There are ways in which manufacturers can either avoid disputes or manage the impact of a dispute when one arises.

How to avoid a dispute?

  1. Active contract management is key. A contract is a living document to which both manufacturer and customer should constantly refer during the life of the project. It is essential to document compliance with all obligations, including specifications and quality assurance.

  2. Pay attention to the dispute resolution clause. Dispute management always starts with the contract. It is important to find a dispute resolution clause that works for the project. In international supply chain relationships, arbitration is almost always the preferred mechanism.

  3. Approach disagreements head-on. Disagreements are sometimes inevitable, but they do not need to put an end to the project. Active and open communication in the event of a disagreement can nip a dispute in the bud.

What to do when a dispute arises?

  1. Seek legal advice. We can help you bring or defend a case. A supply chain dispute is rarely one-sided and it is important to tell your story and control the narrative from the beginning.

  2. Preserve documentation. A tribunal will form its first impression of a case from the documentary evidence presented to it. Keeping a well-organised record of communication such as emails, letters and phone calls, will make it easier to present a case.

  3. Act quickly. Manufacturers may have immediate concerns, such as a security guarantee that is redeemable on demand or the preservation of an important piece of evidence. Interim relief may be available to preserve the status quo.


Arbitration in India - legal implications of choice of ‘seat’

(Prashant Mara & Aishwarya Kaushiq)

The debate on the role of ‘seat’ versus ‘venue’ in determining which court has supervisory jurisdiction over the arbitration, and whether the seat is akin to an exclusive jurisdiction clause have been long-standing contentious issues under Indian arbitration law.

The significance of ‘seat’ vis-à-vis ‘venue’ was clarified by the Supreme Court in its BALCO judgment, where it was held that the seat of arbitration defines the law that governs the arbitration, along with determining which court(s) exercises supervisory jurisdiction over such arbitration. The Supreme Court further went on to state that if an international commercial arbitration has its seat in India, but the ‘venue’ is outside India and hearings therefore take place in the venue that would not have the effect of changing the seat of arbitration or the applicable law, which would continue to be that of India.

In a further Supreme Court judgment in the NHPC case, it was confirmed that the clause specifying the "seat" of the arbitration operates as an exclusive jurisdiction clause. As a result, only the courts where the seat is located, will have supervisory jurisdiction over the arbitration, to the exclusion of all other courts.


Protections for Indian Overseas Investments

(Daniel Harrison, Associate Director - Osborne Clarke, United Kingdom & Luisa Amado, Associate - Osborne Clarke, Germany)

Indian investors with overseas investments will have access to special protections and rights if they structure their investments to qualify under an investment treaty, but they must take care given India's recent stance on terminating and amending such treaties.

Investment treaties offer protections for foreign investors as well as the right to bring actions against states in arbitration to enforce their rights (for example, if a state expropriates a foreign investor's assets or discriminates against it). This is key for political risk mitigation and is often the only viable option for redress when a state takes steps which adversely impact a foreign investment. Such protections and rights are available in a bilateral or multilateral investment treaty ('BIT' or 'MIT') between the home state of the investor and the host state of the investment.

In recent years, after facing numerous BIT claims from foreign investors, India has terminated and sought to replace or to amend its BITs. This has changed the nature and availability of protections and rights for Indian investors, who are not otherwise protected by MITs to which India is not a party (for example, the Energy Charter Treaty).

If an Indian investor is considering making an investment in a foreign state, the investor should seek advice on whether a BIT exists between India and that foreign state and if so in what form. Even if a BIT exists, it may be necessary to structure the investment via a third state to gain access to more favourable protections and rights. This issue must form part of any foreign investment strategy.


What's the litigation position now in England post-Brexit?

(Michelle Radom, Head of Disputes & Risk Knowledge - Osborne Clarke, United Kingdom)

Now that the dust has settled, what are the options for resolving your dispute in England?

The English courts remain well-placed to handle large-scale international disputes. England and Wales is a popular choice of jurisdiction in international commercial contracts for a range of reasons, including the reliability and quality of the English judicial system and its judges and its perceived neutrality and familiarity with complex, high value disputes.

However, now that the UK has left the EU, there is some uncertainty as to whether European courts will recognise and enforce judgments based on an exclusive jurisdiction clause entered into before 31st December 2020 under the Hague Convention on Choice of Court Agreements 2005 (where proceedings are started on or after 1st January 2021). The UK was a party to this agreement since 2015 as a member of the EU, but signed up to it in its own right only from 1st January 2021. It remains unclear what position the European national courts will adopt, should enforcement in their jurisdiction be required.

However, this issue will not arise where the exclusive English jurisdiction clause was agreed on or after 1st January 2021. Furthermore, when deciding whether a jurisdiction clause is required (and if so, which country should be nominated), a range of factors should be considered (including where the losing party's assets are likely to be located, where the parties are situated and so on). Put briefly: if the English courts were an appropriate choice before Brexit, it will generally be the case that they remain so now. Brexit has also had no effect on the position as between England and India when it comes to the recognition and enforcement of judgments between these 2 countries.


Why arbitrating in London can be a good idea too

(Greg Fullelove, Head of International Arbitration - Osborne Clarke, United Kingdom & Michelle Radom, Head of Disputes & Risk Knowledge - Osborne Clarke, United Kingdom)

The legal framework for international arbitration is unaffected by Brexit and reforms in arbitral rules have also created the opportunity for genuinely expedited proceedings that have added to the appeal of arbitration. So would arbitration be a good fit for your transaction?

Arbitration has long been used in a wide variety of sectors to settle disputes and is a cross-border dispute mechanism of choice. There are a number of features that underpin its popularity. We could speak of confidentiality, neutrality, the ability to nominate an arbitrator and general procedural flexibility. Here, however, we highlight just two of the attractive features that have benefitted parties in all types of sectors.

The need for speed

The time it takes to reach a final resolution of a dispute is crucial and it is often said that "justice delayed is justice denied". The ability of the parties to design their own procedural steps, free from the constraints of court rules and appropriate for the particular issues in dispute, is one of the main advantages of arbitration.

For years, parties said that they wanted swifter proceedings. Arbitration adapted. Several institutions have introduced expedited arbitrations to ensure the process can be accelerated. For example, under the ICC rules, a streamlined procedure (with a reduced scale of fees) is available, on an opt-out basis, for disputes not exceeding US$ 3million. The parties can choose to opt into the procedure for disputes above that level too. Our experience of these proceedings is that the net result is a procedure to final award lasting roughly eight months, with much reduced legal spend. It is proving a popular choice.

In the vast majority of arbitrations there is no right of appeal (that will certainly be the case for ICC, LCIA and other institutional proceedings). An award can in principle be 'challenged' (and potentially 'set aside') on certain narrow grounds, mostly relating to procedural impropriety, but this is something that will only happen in a low percentage of cases and is not an opportunity to 're-open' the case.


Arbitration in London is a popular choice of forum for resolving international disputes, and has proved essentially 'Brexit-proof'. The central instrument for recognition and enforcement of international arbitration awards remains unaffected by Brexit. The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, has been adopted by over 160 countries (the UK and India included) and its unparalleled reciprocal arrangements, the cornerstone of enforcement actions over the years, continue to be one of arbitration's greatest attractions.

So now is a good time to ask anew the question "arbitration or court proceedings?" when finalising contracts. You have options: just following the precedent is not enough. And for those tempted to change, well, an international arbitration with a London seat is hardly an exotic beast. The ability to retain many of the advantages and features of English law and practice that attract you, together with private and confidential proceedings, can lure in even the most change-adverse.


A new Netherlands Commercial Court provides a further option for contractual dispute clauses

(Jeroen Bedaux, Managing Partner - The Netherlands, Osborne Clarke)

On January 1, 2019, the Netherlands Commercial Court (NCC) was launched. The NCC will allow parties to swiftly and effectively litigate international business disputes in the English language, with all court documents and judgments in English. It is a specialized international commercial court and its judges have a wealth of experience in resolving international business disputes.

The NCC's judgments will be enforceable throughout the EU and Switzerland but enforcement in India will be harder, given that India is not a signatory to the Hague Convention. This could provide a tactical advantage when it comes to enforcement for Indian parties doing busines in the Netherlands (with entities based either in the Netherlands or elsewhere in Europe). That is because a judgment against the European counterparty will be easily enforceable, whereas a negative judgment against an Indian party, cannot be easily enforced in India.

In addition, the reputation of the Dutch judiciary is ranked among the most efficient, reliable and transparent worldwide. And the Netherlands – and Amsterdam in particular – are a prime location for business, and a gateway to Europe. The NCC has the tools to communicate effectively and provide swift and firm guidance in complex litigation. With the NCC, language barriers no longer exist, parties litigate on a level playing field and the applicable procedural rules are crystal clear and stand out in simplicity. Therefore, for Indian parties, the NCC is another option to consider, in addition to international arbitration and litigation before local or international commercial courts.


bottom of page