Doing business in India offers enormous growth opportunities but also legal challenges. India is not a signatory to the Vienna Sales Convention and has its own contract law dating back to 1872. At Musch Legal, we assist Dutch clients with IT outsourcing, joint ventures, and commercial contracts. Indian court proceedings typically take eight to fifteen years — arbitration in Singapore or London is therefore the right route for virtually any significant contract.
What is the legal problem? (What is different about India?)
Indian court proceedings are extremely lengthy. The legal system is based on common law, but implementation experiences significant delays. India is not a CISG signatory — for B2B sales, national Indian law or contractual choice of law applies. FEMA governs currency and investment control. For IP protection, there is domestic legislation with strong registration requirements.
What does the law say? (Which Indian frameworks apply?)
Indian Contract Act 1872 governs general contract law. Sale of Goods Act 1930 governs sales. Specific Relief Act 1963 governs remedies. Foreign Exchange Management Act 1999 (FEMA) governs currency control and foreign investment. Companies Act 2013 governs companies. For arbitration, the Arbitration and Conciliation Act 1996 applies (comparable to UNCITRAL Model Law).
India is a signatory state to the New York Convention 1958. Foreign arbitral awards are enforceable via Part II of the Arbitration and Conciliation Act.
Part
Point of attention for Dutch exporters
Choice of law
Dutch law possible; CISG not automatic
Dispute route
SIAC or LCIA arbitration; avoid Indian courts
Currency
FEMA compliance for payments and investments
Company
WOS, JV or LLP under Companies Act 2013
IP
Registration via Indian Trademark/Patent Office
Part
Point of attention for Dutch exporters
Choice of law
Dutch law possible; CISG not automatic
Dispute route
SIAC or LCIA arbitration; Avoid Indian courts
Currency
FEMA compliance regarding payments and investments
Company
WOS, JV, or LLP under the Companies Act 2013
IP
Registration via the Indian Trademark/Patent Office
What risks do companies face? (Where does the risk lie?)
Litigation before Indian courts can take eight to fifteen years. Currency restrictions under FEMA can block payments. Unfamiliarity with Indian IP registration leads to piracy. Tax issues regarding transfers (Vodafone case) are complex. Unintended permanent establishment via local service providers can lead to tax liability. Reputation issues regarding human rights in the supply chain impact CSDDD compliance.
Practical example from our practice (How did we avoid Indian jurisdiction?)
Musch Legal represented a Dutch company involved in a JV conflict in India under a choice-of-forum clause for an Indian court. The proceedings lasted seven years without a resolution. Upon renegotiating with another partner, we chose SIAC arbitration in Singapore under Dutch law. A similar dispute resulted in an enforceable ruling within 14 months, enforceable in India under Part II Arbitration Act.
What can you do? (What arrangements do you make for India?)
Always use SIAC or LCIA arbitration instead of an Indian court. Align the choice of law with your objectives (Dutch or English law). Incorporate FEMA compliance into payment and investment agreements. Register trademarks and patents via the Indian Trademark/Patent Office. For JVs: build in deadlock mechanisms and exit rights. Engage Musch Legal with Indian counsel for large transactions.