The country-specific Q&A gives a structured overview of the key practical issues concerning dispute resolution in this jurisdiction, including court procedures; fees and funding; interim remedies (including attachment orders); disclosure; expert evidence; appeals; class actions; enforcement; cross-border issues; the use of ADR; and any reform proposals.
Main Dispute Resolution Methods
1. What are the main dispute resolution methods used to resolve large commercial disputes?
Dispute Resolution Methods
India is a common law country with an adversarial dispute resolution system. While litigation and arbitration are the usual methods of dispute resolution, parties can also choose conciliation or mediation, before or during proceedings.
Disputes identified as "commercial disputes" and valued at INR300,000 or greater are heard by designated commercial courts (Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (Commercial Courts Act)). Commercial disputes are disputes arising out of:
Import/export of merchandise or services.
Admiralty and maritime law.
Distribution and licensing agreements.
Joint venture and shareholder agreements.
Intellectual property rights.
The Commercial Courts Act requires compulsory pre-institution mediation and case management hearings, and provides for expedited conduct of litigation in commercial disputes in a way that is distinct from regular civil procedure. However, in most states, these provisions are yet to be implemented in practice.
Most large commercial contracts tend to contain an arbitration clause, with parties preferring arbitration over the lengthier court process. Arbitration in India is a 12-month timebound process (extendable to 18 months with the parties' consent). An amendment in 2019 to the arbitration regime provided for the establishment of the Arbitration Council of India (although the section concerning its establishment is yet to be notified). This will exercise powers of grading, issue guidelines for arbitral institutions and recognise professional institutes to provide accreditation to arbitrators. (SeeArbitration Procedures and Practice in India: Overview.)
Online Dispute Resolution
COVID-19 has seen courts and arbitral tribunals adopt rules and operating procedures to facilitate the resolution of disputes online, including enabling e-filing and hearings through video conferencing. However, it is unclear whether these methods will be retained as a permanent alternative to physical courts or be phased out.
Standard of Proof
The applicable standard of proof in civil cases is on a "preponderance of probabilities," while criminal proceedings require proof "beyond reasonable doubt."
2. What limitation periods apply to bringing a claim and what triggers a limitation period?
Most limitation periods are set out in the Limitation Act 1963, with some provided for under subject-specific legislation. A limitation period commences when the cause of action arises (that is, when a party becomes entitled to make a claim). A delay in referring a claim is not curable and can result in its dismissal.
Most claims under contract are subject to a limitation period of three years, while some land-related disputes have a limitation period of 12 or 30 years. Tortious actions generally have a limitation period of either one or three years. A residuary limitation period of three years is set for all disputes not otherwise specifically covered under any law. A fresh period of limitation starts if, within the prescribed period, the counterparty acknowledges liability in writing or makes part payment of dues owed.
3. In which court are large commercial disputes usually brought? Are certain types of disputes allocated to particular divisions of this court?
The subordinate judiciary is divided into civil courts and criminal courts, with a High Court being the highest court of appeal in each state (some states share High Courts). The Supreme Court is the apex court of the country, with the power to hear appeals from the High Courts and certain specialised tribunals. Both the High Courts and the Supreme Court have original jurisdiction in matters relating to constitutional and administrative law.
Civil courts' jurisdiction is determined both by the value of the dispute (pecuniary jurisdiction) and its territorial connection with the cause of action or the defending parties (territorial jurisdiction). Commercial disputes must be referred to the commercial court with territorial and pecuniary jurisdiction. While the courts of first instance are usually subordinate courts designated as commercial courts, in Delhi, Mumbai, Madras, Calcutta and the State of Himachal Pradesh, the High Court of the state is also vested with original jurisdiction and can entertain civil and commercial disputes above a specified value.
Even in states where the High Courts do not normally have original jurisdiction over civil disputes, they have been granted exclusive jurisdiction to deal with specific disputes such as admiralty, international arbitration and certain specific intellectual property disputes relating to the validity of patents and designs.
There are special tribunals (and appellate tribunals) to deal with some kinds of disputes, including the:
National Company Law Tribunal (NCLT), which deals with shareholder disputes, cases of oppression and mismanagement, various company law-related claims and corporate insolvency.
Competition Commission of India, which deals with anti-trust or competition law issues.
Labour courts/industrial tribunals, which deal with labour law-related disputes.
Debt Recovery Tribunal, which deals with debt recovery proceedings by banks and certain financial institutions.
The answers to the following questions relate to procedures that apply in the civil courts.
Rights of Audience
4. Which types of lawyers have rights of audience to conduct cases in courts where large commercial disputes are usually brought? What requirements must they meet? Can foreign lawyers conduct cases in these courts?
Rights of Audience/Requirements
Lawyers enrolled with any Indian State Bar Council have a right of audience to conduct cases in courts, tribunals and quasi-judicial bodies, subject to certain exceptions. A party must execute an authorisation document (Vakalatnama) in favour of the advocate, which is filed in court.
Before the Supreme Court, cases can be instituted and pleadings can be filed only by qualified (after passing an examination for the purpose) "advocates on record." However, any qualified lawyer can appear once a matter has been filed. Specialist tribunals also permit non-lawyers to appear, notably the NCLT, which permits company secretaries, chartered accountants and cost accountants to conduct cases.
Parties can represent themselves in court proceedings. In addition, courts can permit any person not enrolled as an advocate to appear before them (section 32, Advocates Act 1961).
The Supreme Court has recently ruled that foreign lawyers or law firms cannot offer legal services in India on a permanent basis and can only offer advice during casual visits that do not amount to the regular practice of law. Foreign lawyers may be permitted to appear in India-seated arbitrations and are governed by the code of conduct applicable to Indian lawyers.
Fees and Funding
5. What legal fee structures can be used? Are fees fixed by law?
Legal fees are contractual and there is no statute fixing or limiting the fees chargeable by lawyers. They are typically structured as task-based billing or hourly rates, or a combination of both.
Contingency fees or fees determined as a percentage of the final judgment or award are deemed unethical and are prohibited.
6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation costs?
Third party funding of litigation is a grey area. While enrolled lawyers are expressly barred from funding litigation or setting fees that are contingent on the result of the litigation, there does not appear to be any restriction on third parties (non-lawyers) funding litigation.
Legal protection insurance is not available in India. However, some liability insurance policies may cover litigation costs in the event of claims being made against an insured party.
7. Are court proceedings confidential or public? If public, are the proceedings or any information kept confidential in certain circumstances?
Court proceedings are not confidential and judgments and orders of the courts are often made available on court websites, subject to the exceptions set out in section 7 of the Contempt of Courts Act 1971. Parties can also file an application seeking for proceedings to be held in camera (usually in family disputes, trials of rape or child-related offences), or for certain information to be received in confidence. In the case of victims of sexual assault, no person, including the police during investigation, is permitted to print or publish the name of the victim or any other information that could lead to the victim's identification in public.
Superior courts have, in the past, entertained requests for super injunctions, pre-emptory injunctions and media gag orders in defamation cases, although these are very rare. These reliefs require very strong prima facie evidence.
8. Does the court impose any rules on the parties in relation to pre-action conduct? If yes, are there penalties for failing to comply?
The Commercial Courts Act mandates pre-institution mediation in commercial disputes where no urgent interim reliefs are sought. Additionally, where the counterparty is the government, or a public officer being sued in their official capacity, a suit can only be instituted after serving notice of the dispute and waiting two months. This requirement can be waived by the court in appropriate circumstances, such as where there is need for urgent or interim relief.
There are also subject-specific requirements for pre-action conduct. These are mostly notices and forms set out, for example, in the:
Arbitration and Conciliation Act 1996.
Insolvency and Bankruptcy Code 2016.
Negotiable Instruments Act 1881.
Failure to comply with mandatory pre-action conduct can be fatal to a claim in some cases.
9. What are the main stages of typical court proceedings?
A claimant can initiate court proceedings by filing a plaint (the claim) along with the applicable court fees (usually a percentage of the claim value) and relevant documents, subject to any mandatory pre-action conduct. If filed properly, notice is issued to the defendant(s). If the government is a party, they are usually required to be served before filing.
A claimant can also seek urgent interim reliefs ex parte (before notice of proceedings is issued to the defendant).
Whether proceedings can be commenced and progressed online depends on the court/tribunal. For example, in the National Company Law Tribunal Bengaluru and National Company Law Tribunal Delhi, National Company Law Appellate Tribunal, Delhi District Courts and the National Consumer Disputes Redressal Commission, all pleadings must be e-filed on the respective portals along with physical filings.
Notice to the Defendant and Defence
Notice to the defendant is usually effected by the court, through personal service on the defendant at its address by an officer of the court, and/or by post. A claimant can also serve the summons itself, either by personal delivery or by post, courier or electronic means. If these methods fail, it may be possible to seek for leave to effect substituted service by affixing the summons on the defendant's premises or publishing it in a newspaper.
The defence (and counterclaims, if any) must be submitted within 30 days of the defendant being served, extendable by another 60 days and further extendable for any period as fixed by the court where cause is shown. In the commercial courts, however, the defence must be filed within 30 days of service of the summons, extendable by another 90 days (and no further) on payment of costs.
The following steps outline the usual course of a civil dispute and do not include any interlocutory proceedings initiated by a party, which could lengthen and/or change the trajectory of proceedings:
On completion of pleadings, courts often consider whether there is any possibility of an amicable settlement and refer parties to a mediator.
If no resolution is possible, the next stage is admission and denial of documents. This is not always insisted on and many courts skip this step altogether and proceed to trial.
For commercial disputes, courts are statutorily mandated to conduct case management hearings to fix the overall timelines for the conduct of the case. In practice, this procedure is yet to be strictly implemented in all commercial courts. Commercial courts, like regular civil courts, often directly proceed to frame issues for trial, which inform parties of the facts to be established at trial and the burden of proof cast on each of them.
Parties can establish their case by examining themselves and their witnesses by affidavit and marking documents in support of their position.
A claimant typically leads its evidence first, and each witness who is examined is sequentially cross-examined by the defendant's lawyers.
The defence then leads its evidence, and the claimant (and other defendants, if applicable) examine the defendant and its witnesses.
The claimant and then the defendant advance oral arguments (with reference to the law and evidence led). Most parties also submit these arguments in writing to aid the court.
Courts pass judgment by answering each of the issues framed.
Summary procedure, without a full trial, is also available in certain cases, for example where there are admitted debts (Orders XIII A and XXXVII, Code of Civil Procedure 1908).
The courts can, at their sole discretion, impose costs on parties for delay in, or non-compliance with, procedure at any stage. Certain tribunals have also introduced mandatory e-filing requirements, and the processes must be specifically checked.
10. What steps can a party take for a case to be dismissed before a full trial? On what grounds can such applications be brought? What is the applicable procedure?
A defendant can seek summary dismissal of a suit on the following grounds:
The claim does not disclose a cause of action.
The relief claimed is undervalued and/or the prosecuting party has failed to remit the appropriate court fee, despite being directed to do so.
The suit is barred by any law or by the statute of limitations.
A defendant can also cite the existence of an arbitration agreement to have a claim referred to arbitration.
A defendant can also seek summary judgment on the merits, in cases where it can convince the court that:
Sufficient admissions of facts have been made.
The claimant is unlikely to succeed at trial and there is no compelling reason to record oral evidence.
The defendant must file an application under the relevant provision of the Code of Civil Procedure 1908 (ideally before/along with their defence on merits). These applications are usually heard as a preliminary issue, before proceeding with the next steps in the main case.
11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on what grounds?
The defendant can apply for an order for the claimant to provide security for cost at any stage of the proceedings. This must be granted in cases where the claimant resides outside India and does not possess sufficient immovable property within India, other than the property in respect of which the proceedings have been initiated.
12. What are the rules concerning interim injunctions granted before a full trial?
Availability and Grounds
Interim injunctions (and ex parte injunctions before a notice of claim is issued) are granted if the applicant demonstrates all of the following:
A prima facie case.
Balance of convenience.
Irreparable injury if interim relief is denied.
Precedents have provided additional requirements in certain specific cases. For example, injunctions against disbursement of amounts under bank guarantees or letters of credit are not granted unless the applicant also demonstrates fraudulent conduct of the counterparty and irretrievable injustice.
Apart from in a few jurisdictions (such as Mumbai), applicants are not usually required to provide any undertaking to the court to compensate the respondent if it is subsequently determined that the interim relief was not warranted.
Standard of Proof
The standard of proof required for obtaining interim orders of attachment is high. Courts cannot grant these orders mechanically, and cogent and strong evidence is required.
In most jurisdictions, interim relief can be obtained without prior notice to the defendant, even on the same day in urgent cases. However, some courts and tribunals have rules mandating prior service of a petition on a counterparty, which may be waived if it is established that issuing notice would defeat the relief sought.
If an ex parte order for an interim injunction is granted, the claimant must dispatch notice of the order to the defendant within 24 hours, failing which the order can be summarily vacated.
Prohibitory and Mandatory Injunctions
The threshold for grant of mandatory interim injunctions is higher than that for grant of prohibitory interim injunctions (which are more common). Mandatory interim injunctions can be granted, in rare cases, to restore the last uncontested status quo, on a showing of a strong case for trial rather than a mere prima facie case (in addition to other requirements set out above). A claimant must also demonstrate that the likely injury cannot be adequately compensated in monetary terms.
Right to Vary or Discharge Order and Appeals
Ex parte ad interim orders must be confirmed or vacated by a court within 30 days, with notice to the defendant, either of its own motion, or on application by the parties. Interim orders are appealable under Order XLIII of the Code of Civil Procedure 1908, although appeals against ex parte ad interim orders are not typically entertained before the 30-day period has elapsed.
13. What are the rules relating to interim attachment orders to preserve assets pending judgment or a final order (or equivalent)?
Availability and Grounds
To obtain an interim order for the attachment of property to preserve assets, the claimant must demonstrate that the defendant either:
Intends to obstruct or delay the execution of any decree that may be passed against it.
Is about to abscond or dispose of the whole or part of its property.
Is about to remove the whole or any part of the property from the local limits of the court's jurisdiction.
Attachment orders are discretionary, and a court can instead direct that the defendant provide satisfactory security.
Standard of Proof
The standard of proof required for obtaining interim orders of attachment is high. Courts cannot grant these orders mechanically, and cogent and strong evidence is required.
It is usual practice to issue notice to the defendant before passing this type of order, but courts can pass them without notice (and even on the same day) if it is demonstrable that the purpose of granting the order would be defeated by delay.
Courts cannot grant interim measures in aid of substantive proceedings in any other jurisdiction (local or foreign). However, courts can grant interim measures in aid of arbitration, including foreign-seated arbitration.
Preferential Right or Lien
Interim attachment orders do not create a preferential right or lien over the attached property and only limit the property owner's exercise of certain rights with respect to the property. The existence of an interim attachment order does not affect any pre-existing rights of individuals who are not parties to the proceedings, nor does it bar any other person holding a decree against the owner from seeking execution of it by selling the attached property.
Damages as a Result
If the attachment was sought on bona fide, valid and sufficient grounds, the claimant is unlikely to be held liable for any damages suffered as a result of the attachment. However, courts have wide discretion to compensate any party that suffers due to actions prosecuted in bad faith.
Courts can direct the claimant to provide security against an attachment order, but this is unusual.
14. Are any other interim remedies commonly available and obtained?
Courts have wide powers to grant interim orders in furtherance of the main relief (on application by the parties). Common examples include:
Injunctions (both preventive and mandatory).
Interim attachment and/or sale of any movable property or property that is subject to speedy and natural decay.
Appointment of commissioners (primarily to independently investigate or take evidence) or receivers (to take custody and manage property).
Detention, preservation and inspection of property or documents.
In money recovery suits, deposit of money or some other thing capable of delivery in court (with or without security). The amount due is admitted by the respondent or the respondent admits that it holds the thing as a trustee for the claimant.
15. What remedies are available at the full trial stage? Are damages only compensatory or can they also be punitive?
At final disposal of a suit, courts can award the following relief:
Specific performance of contracts.
Prohibitory or mandatory injunctions.
Damages for contractual breach are only compensatory in nature, not punitive. A party seeking damages must prove its loss. The standard of proof in civil cases is usually that of the preponderance of probabilities. Contractual clauses stipulating liquidated damages are interpreted as constituting a limit on the damages payable, and are not usually treated as automatically entitling the claimant to the amount stipulated. However, where it is shown that the damage or loss is difficult or impossible to prove, and the liquidated amount named in the contract is a genuine pre-estimate of the loss, the contractually stipulated amount can be awarded.
Courts can award aggravated and exemplary damages in tortious claims.
16. What documents must the parties disclose to the other parties and/or the court? Are there any detailed rules governing this procedure?
All documents that are in the power, possession, control or custody of the parties must be filed in court at the same time as the claim/statement of defence (and counterclaim if any), including relevant documents that are adverse to the party's case. The parties must also declare on oath that disclosure has been made. The duty to disclose continues until the disposal of the case.
Leave of the court is required to produce and rely on additional documents. Parties can also procure specific orders from the court to inspect documents or to produce specific documents. Courts can impose exemplary costs if a party wilfully or negligently fails to disclose a document.
In practice, courts rarely insist on full disclosure and routinely allow production of additional documents at the evidence stage. It is also very rare for courts to penalise a party who has either wilfully or negligently failed to disclose documents. Non-production of documents ordered to be produced rarely attract orders for costs, but courts tend to draw an adverse inference against the defaulting party.
A third party can be summoned by the court (either on its own motion or on an application filed by any party to the dispute) to produce a document before it.
India has started digitising court records, and documents can be provided in electronic form in several courts in India (for example, in Delhi and Mumbai) which accept or mandate e-filing. During the COVID-19 pandemic, several courts across the country have begun accepting e-filing of pleadings and documents. It is unclear whether these measures will remain or are only temporary.
17. Are any documents or communications privileged? If privilege is not recognised, are there any other rules allowing a party not to disclose a document?
Communications between a lawyer (including barristers and attorneys) and client cannot be disclosed without the client's express consent (section 126, Evidence Act 1872). However, a communication is not privileged if it furthers any illegal purpose or relates to any facts observed by the lawyer in the course of employment which show that a crime or fraud was committed since the start of the employment. A court can compel a party to disclose communications with their legal adviser if the person offers themselves as a witness, but only for the purpose of explaining their evidence (section 129, Evidence Act).
It is unclear whether privilege also extends to communications between a party and its in-house counsel. While the Supreme Court has held that an employee (legal) who is not required to plead in court is not an advocate, certain High Courts have ruled that privilege does extend to in-house counsel if they are otherwise qualified to give legal advice and if the communication itself relates to questions of law.
Admissions in communications between parties that have been made "without prejudice" are protected, including those made in a genuine attempt to settle an existing dispute. This applies when the admissions were made under the express condition that evidence of them would not be given, or if the court can infer that the parties had together agreed that evidence of them would not be given.
Other Non-Disclosure Situations
There are certain other situations in which a person cannot be asked to give evidence (for example, spouses cannot be required to give evidence against each other, and doctors cannot be compelled to disclose their patient records).
18. Do witnesses of fact give oral evidence or do they only submit written evidence? Is there a right to cross-examine witnesses of fact?
Probatory Value of Different Types of Evidence
Examination-in-chief is usually done by written affidavit followed by oral cross-examination. Parties can also (with leave of court) deliver interrogatories in writing for the examination of the counterparty's witness. Documentary evidence is preferred to oral evidence and no oral evidence can be led about the contents of a document.
The court can on its own motion summon any person (either parties to the suit or third parties) to give oral testimony, if at any time it thinks it necessary to examine that person as a witness.
Right to Cross-Examine
Cross-examination is a right in civil suits and all witnesses are subject to cross-examination after they submit their evidence (and not at any earlier stage of the proceeding). A witness can be asked questions that tend to test the witness's veracity or to damage their credibility. However, a question unrelated to the proceeding cannot be asked unless the person asking it has reasonable grounds for thinking that the imputation that it conveys is well founded. Further, courts can pose any question to the witness that they deem relevant.
Specialist tribunals often have their own procedure. In particular, the Debt Recovery Tribunal and National Company Law Tribunal rules permit cross-examination of a witness only with leave of the tribunal.
Third Party Experts
19. What are the rules in relation to third-party experts?
Expert witnesses can be appointed by the parties or by the court, either of its own motion or at the request of the parties. In practice, however, it is not common for parties or the court to appoint an expert in civil proceedings.
The parties are not obliged to disclose draft experts' reports that were prepared for the purposes of litigation where they have not ultimately been used. Disclosure of these reports is governed by the general rules of disclosure. However, the courts do not always enforce the disclosure rules (see Question 16).
Role of Experts
The appointment of expert witnesses is permitted to a limited extent, to enable the court to:
Form an opinion on a point of foreign law, science or art.
Identify handwriting or finger impressions.
Examine information stored or transmitted in electronic or digital form.
Experts are expected to give independent testimony, even if appointed by one of the parties. However, since experts are usually appointed by the parties, in practice, the probative value of their evidence is low.
Cross-Examination of Experts
An expert witness, whether appointed by the court or by a party, is subject to cross-examination only at the trial stage (not at the disclosure stage).
Expert witness fees are borne by the appointing party or shared equally between the parties if ordered by the court.
20. What are the rules concerning appeals of first instance judgments in large commercial disputes?
Appeals from final decrees of a commercial court or commercial division of a High Court (where it has ordinary original civil jurisdiction) lie to the commercial appellate court or commercial appellate division of the High Court, as the case may be. No permission is required for this first appeal. A further appeal can be filed to the Supreme Court under Article 136 of the Constitution after seeking special leave to appeal. In rare cases, a High Court can certify that the case involves a substantial question of law of general importance that needs to be decided by the Supreme Court, in which case there is no requirement to seek leave.
Grounds for Appeal
A first appeal can be made on the grounds of error in appreciation of facts and law. Special leave to appeal to the Supreme Court is discretionary and requires a dispute on a substantial question of law.
Appeals to the commercial appellate court or commercial appellate division of the High Court can be made within 60 days, whereas appeals to the Supreme Court under special leave must be filed within 90 days. Courts can condone delays in filing an appeal if sufficient reason is provided. In practice, delays in filing appeals are routinely excused.
21. Are there any mechanisms available for collective redress or class actions?
Class actions are recognised. When a number of persons have the same interest in a suit, one or more can, with permission from the court, sue, be sued, or defend a suit, on behalf of all those interested in it. The decision binds the entire category of individuals represented. Anyone falling within the category can apply to court to become a party to the proceedings and object to confirmation of the representative.
Shareholders of a company can, subject to certain conditions, also initiate a class action before the NCLT on grounds specified under the Companies Act 2013 (for example, in relation to oppression and mismanagement, or to seek injunctions preventing the company from breaching its constitutional documents). However, a class action under the Companies Act 2013 cannot be brought against a banking company.
Funding arrangements for class actions are made by the parties themselves.
22. Does the unsuccessful party have to pay the successful party's costs and how does the court usually calculate any costs award? What factors does the court consider when awarding costs?
The definition of costs includes all expenses incurred as part of the proceedings, including expenses for issuing notices, obtaining copies, witness expenses and legal fees. Courts do not manage, limit or regulate costs during proceedings. Legal costs are awarded only in accordance with rules made by the High Court in each state and are usually minimal and not based on the actual legal costs incurred.
The award of litigation costs is a matter of the court’s discretion. The general rule for commercial disputes is that the unsuccessful party will pay costs to the successful party, but the courts can deviate from this rule. Some factors considered by courts when awarding costs include:
The conduct of parties.
The frivolity of the claims and/or counterclaims.
Refusal to accept reasonable settlement offers.
Undue delay in proceedings.
23. Is interest awarded on costs? If yes, how is it calculated?
Interest can be awarded on costs in matters before the commercial courts, at the court's discretion. It is generally awarded at a rate that the court considers reasonable.
Enforcement of a Local Judgment
24. What are the procedures to enforce a domestic judgment in the local courts?
Sections 36 to 74 (Part II) of the Code of Civil Procedure 1908, read with Order XXI, provide rules governing enforcement/execution of local judgments. On the successful party's application, a local judgment (called a decree) can be enforced either by the court that passed it or by the court to which it is sent for execution (usually where the defendant resides or has property).
Common methods of enforcement include delivery, attachment or sale of property and appointing a receiver. Less common methods include arrest and detention in prison for up to three months.
The time limit for enforcing a domestic judgment is 12 years from the date of the decree. However, a decree granting a perpetual injunction is not subject to any period of limitation.
25. Do local courts respect the choice of governing law in a contract? If so, are there any national laws or rules that may modify or restrict the application of the law chosen by the parties in their contract? What are the rules for determining what law will apply in the absence of any agreement and/or to non-contractual claims?
Contractual Choice of Law
Indian courts recognise the principle of party autonomy and respect a choice of governing law other than Indian law, subject to a few caveats. The choice of foreign law cannot derogate from the mandatory and overriding provisions of Indian law, or conflict with Indian public policy. Any choice will be invalid to the extent of the conflict. Whether two Indian parties (with no foreign element) can contract out of Indian law is a grey area, although several decisions indicate that this will be considered to be against Indian public policy.
Conversely, if it is established that Indian courts have jurisdiction over a dispute, an express choice of Indian law as the governing law will be respected, irrespective of any connection to a foreign law.
No Choice of Law and Non-Contractual Claims
In the absence of any agreement between the parties on governing law, the applicable law will be determined based on the closest and most real connection to the dispute between the parties.
In relation to tortious claims, the rule of double actionability applies in India (that is, the defendant's act must be wrongful under the foreign law in question and under Indian law).
Contractual Choice of Forum
26. Do local courts respect the choice of jurisdiction in a contract? Do local courts claim jurisdiction over a dispute in some circumstances, despite the choice of jurisdiction?
Courts typically respect exclusive jurisdiction clauses. Within India, a court without jurisdiction cannot have jurisdiction conferred on it by contract. However, if two or more courts have jurisdiction, a clause conferring exclusive jurisdiction on one of them is valid and enforceable.
Parties can also choose a neutral foreign forum and Indian courts have, in the past, respected that choice. However, regardless of an exclusive jurisdiction clause, an Indian court can restrain foreign proceedings and assume jurisdiction to avoid injustice and where there are exceptional facts and circumstances that would make it more convenient to try the issues in India. In addition, for suits relating to immovable property situated in India, unless the relief claimed can be secured entirely through the defendant's compliance, an Indian court will have exclusive jurisdiction and will likely assume jurisdiction.
India is not a signatory to the HCCH Convention on Choice of Court Agreements 2005 (Hague Choice of Court Convention) or any other international convention on the subject.
Service of Foreign Proceedings
27. If a party wishes to serve foreign proceedings on a party in your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction a party to any international agreements affecting this process?
India is a signatory to the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague Service Convention). Service takes place through the Central Authority designated for this purpose (which in India is the Ministry of Law and Justice, Department of Legal Affairs) (Article 5, Hague Service Convention).
As service can only be effected through the Central Authority, private or personal modes of service under Article 10 are not permitted. Process issued by a foreign court of a country which is also party to the Hague Service Convention can be sent to an Indian court and served as if they were summons issued by the Indian court under section 29(c) of the Code of Civil Procedure 1908 (Notification No. G.S.R. 24(E) dated 12 January 2009). The Code of Civil Procedure 1908 also provides for methods of substituted service when the defendant's address is unknown or they evade service.
All requests for service must be served in duplicate, in the English language or accompanied by an English translation.
On completion of service, the applicant receives a certificate containing details of the method, place and date of service, and the person to whom the document was delivered. If service is not complete, the certificate sets out the reasons preventing service.
Taking of Evidence for a Foreign Court Proceeding
28. What is the procedure to take evidence from a witness in your jurisdiction for use in proceedings in another jurisdiction? Is your jurisdiction party to an international convention on this issue?
There are three methods of taking evidence from a witness in the Indian jurisdiction for use in another jurisdiction:
India is a signatory to the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention), under which evidence from a witness can be sought by a letter of request, issued by the court where the action is pending and transmitted to the Central Authority of the jurisdiction where the witness is located. For civil cases, all requests must be in English or accompanied by an English translation. The appropriate Central Authority is the Ministry of Law and Justice, the High Courts in all states and union territories in India, and the district court in whose territory the evidence is to be taken. A letter of request can also be issued to seek deposition testimony to be taken before a diplomatic or consular officer.
Issue a letter rogatory or letter of request in accordance with the Code of Civil Procedure 1908 (Order XXVI, Rule 19 to 22), under which the relevant High Court, on receipt of the letter from a foreign court, will appoint a commissioner to collect the evidence.
A foreign court can also issue a commission to examine a witness situated in India (section 78, Code of Civil Procedure 1908). However, in such a situation, the commissioner cannot compel the witness to appear or give evidence.
Enforcement of a Foreign Judgment
29. How are foreign judgments enforced in your jurisdiction?
India is party to bilateral treaties which govern the recognition and enforcement of foreign judgments. The Indian Government has entered into reciprocal arrangements under section 44-A of the Code of Civil Procedure 1908 and judgments from the courts of these reciprocating jurisdictions can be executed in India in the same way as local judgments. These jurisdictions are the United Kingdom, the United Arab Emirates, the Federation of Malaya, Yemen, Fiji, Singapore, Malaysia, Trinidad and Tobago, New Zealand, the Cook Islands (including Niue), Samoa, Hong Kong, Papua New Guinea and Bangladesh.
For judgments from non-reciprocating territories, a suit must be instituted in India based on the foreign judgment before it can be enforced.
Objections to Enforcement
A foreign judgment must be conclusive to be enforceable. The test for conclusiveness is set out in section 13 of the CPC, which states that a foreign judgment is conclusive as to any matter directly adjudicated on between the same parties, or between parties through whom they or any of them claim, unless the judgment:
Was not pronounced by a court of competent jurisdiction.
Was not given on the merits of the case.
Appears, on the face of the proceedings, to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which that law is applicable.
Was obtained in proceedings that were opposed to the principles of natural justice.
Was obtained by fraud.
Sustains a claim founded on a breach of any law in force in India.
30. What are the main alternative dispute resolution (ADR) methods used to settle large commercial disputes? Is ADR used more in certain industries? What proportion of large commercial disputes is settled through ADR?
There are five methods of ADR with statutory recognition:
Settlement through Lok Adalats (people's courts).
Of these, arbitration is the most relevant to large commercial disputes and is regulated by the Arbitration and Conciliation Act 1996. It is preferred to the much lengthier court process. A large proportion of high-value and complex disputes are resolved through arbitration, particularly those related to the construction and infrastructure sectors, public works contracts and maritime law.
Arbitration, conciliation and Lok Adalat awards have the same force as a court decree and mediated or negotiated settlements are binding if they are recorded as a consent award/decree.
31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR?
Parties can be referred to certain forms of ADR (mediation, judicial settlement and Lok Adalat) at any time during the proceeding, even at the appellate stage and without the consent of the parties. However, arbitration and conciliation are permitted only with the parties' consent.
The Commercial Courts Act mandates pre-institution mediation in cases where no urgent interim reliefs are sought. In addition, after the admissions and denials of the parties to a suit are recorded, courts usually conduct a hearing to determine whether the case is suitable for settlement through mediation and will only proceed if it is found not suitable.
32. How is evidence given in ADR? Can documents produced or admissions made during (or for the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential?
Strict rules of evidence and procedure are not applicable to ADR and parties are free to mutually agree on the applicable procedure. However, the principles of natural justice and the basic rules of procedural fairness continue to apply. Evidence is typically led in arbitration proceedings by witness affidavits, followed by cross-examination.
In arbitration, the confidentiality of proceedings must be set out by the parties in an agreement. In conciliation, there is a statutory requirement for confidentiality. Most formal mediation processes also follow rules that require confidentiality.
33. How are costs dealt with in ADR?
The legal fees and expenses of the arbitrators, courts and witnesses.
The legal fees and expenses of legal officers.
The administrative fees of the arbitral institution.
Any other expenses incurred in connection to the arbitration proceedings.
(Arbitration and Conciliation Act 1996.)
The arbitral tribunal can determine whether costs are payable by one party to the other and their quantum (Arbitration and Conciliation Act 1996). An agreement under which only one party must bear all of the costs of arbitration is valid only if made after the dispute has arisen. The general rule is that the unsuccessful party will be ordered to pay the successful party's costs. However, there may be cases where:
The claim has been grossly exaggerated.
One of the parties has acted unfairly.
The successful party has failed on an issue which was time consuming.
The proceedings were extravagant.
Therefore, other factors, including the following, must be considered:
The conduct of parties.
The frivolity of the claim.
Whether a reasonable settlement offer has been made and refused.
Schedule 4 of the Arbitration and Conciliation (Amendment) Act 2015 provides a model fee schedule for domestic arbitrations. Some arbitration institutions have additional rules that specify the manner and quantum of costs. The costs of a court-referred mediation and Lok Adalat proceedings are minimal, and each party bears their own expenses. In conciliation proceedings, the costs are fixed by the conciliator.
34. What are the main bodies that offer ADR services in your jurisdiction?
Mediation is a voluntary, party-centred and structured negotiation process where a neutral third party assists the parties to amicably resolve their dispute. Each state's High Court has mediation centres. There are also private mediation centres such as the Centre for Advanced Mediation Practice, which facilitate private mediation.
Proposals for Reform
35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into force?
The Indian Cabinet has approved accession to the WIPO Copyright Treaty 1996 and the WIPO Performance and Phonograms Treaty 1996. This will strengthen copyright protection accorded to various works in India, and any copyright that is granted in India will be protected in other signatory states. It is unclear, however, when the provisions of the text will be made operational by law.
In November 2020, the Arbitration and Conciliation (Amendment) Ordinance 2020 (Ordinance) was promulgated. This omits Schedule 8 of the Arbitration and Conciliation Act 1996, which provided rules relating to the arbitrators' qualifications. In March 2021, the Arbitration and Conciliation (Amendment) Act 2021 (Amendment Act) came into effect and repealed the Ordinance. By virtue of the Amendment Act, the onerous qualifications to be appointed as an arbitrator were removed and it was specified that qualifications, experience and norms for accreditation of arbitrators will be such as may be specified by the regulations. The Amendment Act also inserted a provision that vested the commercial court, to which appeals are filed for setting aside an arbitral award, with the power to stay the award if the court is prima facie satisfied that the arbitration agreement or the arbitral award was induced or effected by fraud or corruption.
The Parliament, in light of recent Supreme Court decisions, has sought to enact a new law on data protection. The Personal Data Protection Bill has stringent rules for data collection, including consent of the user while collecting data. This bill proposes to set up a quasi-judicial body to regulate data collection, with a corresponding specialist appellate tribunal. The bill has been referred to a Standing Committee by the lower house of the Parliament, and the Standing Committee's report is awaited.
The Mediation Bill 2021 was recently introduced in the upper house of the Parliament and has been referred to the Standing Committee, whose report is awaited. The Mediation Bill 2021 requires persons to try to settle civil or commercial disputes through mediation, in a time bound manner, before approaching any court or tribunal. It also lists disputes that are not fit for mediation (such as those involving criminal prosecution or affecting the rights of third parties).
India has also signed the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention). The Singapore Convention aims to provide a global framework for the enforcement of mediated settlements in international commercial disputes to encourage mediation as an alternative to litigation.
There are proposals to digitise land records and have a blockchain-based land registry system, to reduce land-related disputes. Some states have rolled out this technology on a pilot basis. A large proportion of civil cases deal with land-related disputes, so the implementation of this technology will have a significant impact on dispute resolution. However, no timeline has been provided to implement a blockchain-based land registry at national level.