International Commercial – India

The practice specialises in providing transnational legal advice tailored to clients’ specific needs in India. Local knowledge and multijurisdictional lawyers in a boutique practice ensure a deep understanding of local laws and regulations. We have lawyers in India and in European and African jurisdictions. Thus, our competences allow for easy and cost-effective means to navigate complex international legal frameworks, assisting with compliance and offering strategic guidance for cross-border transactions. In addition to advisory services, the practice provides robust litigation support, helping clients manage disputes in various jurisdictions. Our approach emphasises personalised advice, leveraging local insights to effectively advocate for clients’ interests in both advisory and contentious matters.

We are currently working on several commercial issues globally, reflecting shifts in markets, technology and regulatory environments. Key areas include: structuring commercial contracts, keeping in mind supply chain; data protection and other requirements; contractual disputes arising from distribution and supply contracts; IP disputes, including AI questions; in addition to labour and employment law and post-COVID structures, etc. These issues require practices such as ours to be adept in multiple areas of law, and to stay apprised of both domestic and international legal developments.

Here are some recent developments and trends in commercial law in India, which have had an effect on the way our clients do business with India (and conclude commercial contracts):

i. Insolvency & Bankruptcy Code (IBC) Amendments: Recent amendments aim to streamline the insolvency process and enhance recovery for creditors, including changes to timelines and the eligibility of financial creditors.
ii. Goods & Services Tax (GST) Updates: Continuous refinements to the GST framework, including rate adjustments and compliance requirements, reflect the government’s effort to simplify tax structures and improve efficiency.
iii. E-Commerce Regulations: The introduction of new guidelines governing e-commerce entities, which focus on consumer protection, data privacy and fair-trade practices, responding to the rapid growth of online businesses.
iv. Corporate Governance Reforms: Enhanced regulations for corporate governance, including stricter disclosure norms and compliance requirements for listed companies, aim to improve transparency and accountability.
v. Digital Contracts & E-signatures: The recognition of electronic contracts and e-signatures has gained prominence, facilitating digital transactions and compliance in a growing digital economy.
vi. Data Protection Legislation: The Digital Personal Data Protection Act, 2023, significantly impacts commercial practices by establishing stringent data privacy norms for businesses.
vii. Investment Promotion: Recent policies and initiatives, such as the Production-Linked Incentive (PLI) scheme, aim to attract foreign investment and boost domestic manufacturing, influencing commercial contracts and partnerships.
viii. Intellectual Property Rights (IPR) Developments: There have been updates in IPR laws to strengthen protections for innovations and trademarks, which is crucial for businesses in competitive markets. The rise of AI presents new challenges in IPR laws, prompting the need for emerging regulations to address these issues effectively.
ix. Arbitration & Dispute Resolution: Reforms to the arbitration framework are enhancing efficiency in dispute resolution, with a focus on reducing delays and encouraging the use of ADR methods. The draft Bill, with proposed amendments – including the appointment of emergency arbitrators – will also make a difference to the arbitration landscape in the country.
x. Sustainability & ESG Compliance: Increasing emphasis on Environmental, Social & Governance (ESG) factors is shaping corporate policies and practices, influencing contractual obligations and corporate social responsibility initiatives.
xi. Public Procurement Contracts: As many of our clients are international companies working on or applying for tenders in various Indian states, we are constantly assessing the modifications to the policies, investment and compliance requirements to ensure both their local jurisdictional obligations and the Indian obligations are seamlessly met.

These developments reflect India’s evolving commercial landscape, addressing the needs of businesses in a dynamic economic environment.

Case Study 1: An Indian company unilaterally altered the responsibility of a foreign company in a large energy infrastructure project.

Our client is a company involved in designing, supplying and installing liquid and gaseous fuel process combustion systems for oil-refining and chemical/natural gas processing industries. Our client’s services were engaged by an Indian company who was awarded a tender for a government project. The Indian company unilaterally changed the obligations and responsibilities of our client in the government project.

We successfully rectified the issues and, through a combination of litigation and negotiation strategies to ensure a working compromise, enabled our client to recover lost fees due to delay in performance, as well as proceeding to complete their project, which would be useful to establish their presence and experience in India.

As part of the strategy, we filed a suit for injunction on behalf of our clients against the Indian company, restraining them from invoking bank guarantees and damages for unauthorised and unilateral tampering with the terms and obligations entrusted with the foreign company. We were successful on all counts.

a. Solution to the crisis in senior-level management in an Indian subsidiary run by a charitable foundation established abroad.

Our client is a company engaged in providing environmentally sustainable solutions using natural energy. The CEO of the company relied on a forged employment contract with the aim of extorting money from the company by invoking clauses in the forged contract. He further initiated arbitration based on such contract, claiming a sum of millions, which would have effectively closed down the company’s operations. We were successful in concluding the arbitration quickly in our client’s favour, as well as in filing criminal charges against the ex-employee.

b. Solution to a foreign company facing problems due to fraud and misrepresentation committed by the consultants appointed by a foreign company for facilitation and handling the operations/distribution of their products in India.

Our client is a foreign manufacturer and distributor of medical equipment, along with related products. The client appointed consultants in India to facilitate and manage the delivery, distribution and installation of medical equipment. However, the consultants failed to perform their obligations as per agreement, and raised a dispute over pending invoices, claiming themselves to be a Micro, Small & Medium (MSME) Enterprise.

We defended the matter before the state High Court and the appeal in the Supreme Court (SC). The SC delivered a landmark judgment in favour of our client, accepting the argument that invoices were raised before the registration of the consultants as an MSME. This prevented the potential loss of millions of dollars. In addition to supporting our clients through this litigation, we also provided advisory services and created a systematic structure for distribution, installation and post-installation services of the medical equipment during COVID, along with the proper documentation, including setup of their subsidiary thereafter.

c. Protected and safeguarded IP rights of the company.

Our client is a well-reputed FMCG company. An Indian company started imitating the trade dress, shape and design of our client’s products. We negotiated and mediated the terms with the Indian company in order to avoid lengthy litigation. We were able to reach a satisfactory settlement, which protected the IP rights of our clients by preventing the Indian company from passing off the trade dress and design of the products manufactured by our client.

Recent developments affecting business in India include regulatory reforms, such as simplifying tax structures (GST) and streamlining regulatory approvals. Atmanirbhar Bharat Initiative promotes local manufacturing and encourages businesses to source and produce domestically, impacting foreign investment strategies. Labour laws, which were earlier fragmented, have been consolidated into four codes. This has made compliance easier, but also requires businesses to adapt to new regulations regarding employee rights and benefits. Start-up Ecosystem Growth is thriving, supported by government initiatives and a growing pool of venture capital, attracting both domestic and international investment. Along with it come IP protections, which have improved protection for innovations, which are crucial for such sectors as technology and pharmaceuticals. These developments create both opportunities and challenges for businesses operating in India, necessitating strategic adjustments and compliance with evolving regulations.

Recent developments affecting business in India also include specific legal and regulatory changes:

1. Execution of Foreign Power of Attorney: The execution and acceptance of foreign powers of attorney in India have become clearer due to updated guidelines, which streamline the notarisation and apostille process. This is crucial for businesses engaging in cross-border transactions, and ensures that foreign entities can appoint representatives in India more efficiently.
2. Change in Group of Companies Doctrine: The doctrine allowing the enforcement of arbitration agreements against non-signatories, particularly in the context of group companies, has evolved. Recent judicial interpretations emphasise the need for clear connections between the parties involved, impacting how companies structure their agreements and potential liabilities in arbitral proceedings.
3. Applicability of MSME Act to Foreign Companies: The Micro, Small & Medium Enterprises Development Act (MSMED Act) now explicitly includes provisions regarding the applicability of certain benefits to foreign companies operating in India, particularly in terms of registration and procurement policies. This change is significant for foreign businesses seeking to tap into government contracts and incentives designed for MSMEs.
4. Appointment of Emergency Arbitrators: The recognition and enforcement of emergency arbitration awards have gained traction in India, allowing parties to seek urgent interim relief before the constitution of an arbitral tribunal. This development provides a faster and more flexible mechanism for businesses involved in disputes, enhancing the overall arbitration framework.

Companies and businesses often face considerable challenges when adapting to technological changes. Here are some key points:

i. Team members may lack the necessary skills or require training to effectively use new technologies.
ii. Integrating new technology into daily operations can be costly.
iii. New technologies may need to be customised to align with existing systems, necessitating adjustments.
iv. The introduction of new technologies (such as AI tools) could result in significant changes to current business models.
v. Adapting to new technology involves keeping up with regulatory and compliance frameworks.
vi. Customers may require time to adjust to new technological offerings, potentially impacting revenue during the transition.
vii. The transition period could temporarily disrupt daily operations.

At RFKN, we help companies at every step to navigate such challenges. Primarily:

i. We help our clients navigate complex regulatory environments, ensuring that every law and regulation is complied with.
ii. We help them draft and review contracts with technology vendors to ensure that the client’s interest is protected.
iii. We ensure that a suitable dispute resolution clause is inserted in such contracts, which safeguards the client’s interest should a dispute arise in the future.
iv. We assist in the resolution of disputes, should a conflict arise due to the violation of terms and conditions as agreed upon.
v. We advise clients on IP-related issues pertaining to new technology (such as AI-based tools).
vi. We help clients develop internal policies and guidelines for the use of such technology by the employees, ensuring that such guidelines are compliant with the existing legal standards.
vii. We help clients identify potential risks emanating from the use of technology, and advise them on the ways in which the same may be mitigated.

As more and more businesses start using AI and storing their data on the cloud, the agreements they have with their technology partners will drive whether their data is secure and their IP is protected. Sectors that handle a large amount of data are often more at cybersecurity risk due to the nature of their operations. Some of them include:

i. Financial Institutions & Banks – Banks and financial institutions handle sensitive data, including financial records of their customers. This may attract cybercrimes in terms of misappropriation of funds, etc.
ii. Retail & E-Commerce – With the mushrooming of e-commerce platforms, personal information and payment data of customers is prone to risk.
iii. Healthcare – Hospitals and healthcare institutions store a wealth of information on patients’ health. This may be used by cybercriminals for their ulterior motives.
iv. Government Agencies – Government agencies have access to a wealth of information on their citizens. As Aadhar Cards are now linked to all kinds of accounts, the access to such information by a cybercriminal can be detrimental for the State and its people.
v. Telecommunications – Telecoms companies are crucial for connectivity and handle vast amounts of data, making them attractive targets for data breaches and service disruptions.
vi. Energy & Utilities – As they form a critical part of the State’s infrastructure, cybercrimes against organisations in this area can lead to significant disruption of services.
vii. Education – Educational institutions hold a repository of data on their students and their guardians. Breach of such data can pose risk to the future of children and their families.

We help organisations navigate cybersecurity challenges in the following ways:

i. We help organisations in adhering to relevant cybersecurity laws and regulations, helping them to avoid legal penalties and strengthen their security practices.
ii. We help them develop internal comprehensive policies on cybersecurity that outline best practices and adhere to the existing legal standards.
iii. We help organisations in drafting and review of contracts with third-party vendors to ensure strong cybersecurity provisions are integrated in such documents. We also ensure that rights and responsibilities are clearly stated in contracts in the event of a breach.
iv. Strong dispute resolution provisions are included in the contract, and we assist parties in safeguarding their interests in case a dispute arises.
v. We assist in negotiating and drafting data protection agreements with partners and vendors, ensuring that all parties are committed to maintaining high cybersecurity standards.
vi. We advise on the safeguarding of information and trade secrets to ensure that organisations are adhering to the existing legal standards.
vii. We help them develop plans in terms of steps to be taken, as per the law, in the event of a cybersecurity breach.
viii. We have a team working in the field of AI, and recently organised a conference with a German institution on this issue.

We advise companies in the clean energy sector, as well as those who are engaged in rural development. By combining the energies and expertise of companies in differing jurisdictions, we bring together and connect European companies with Indian companies in the same sector to deliver sustainable solutions.

Our website regularly covers timely developments in the field, along with case studies, to provide our audience with an insight into the work we do. We also publish newsletters for the benefit of the readers. In addition, we periodically hold conferences on relevant and contentious issues in law, policy and enforcement.

Several new pieces of legislation and updates related to commercial law in India are in the pipeline, reflecting the evolving business environment. Key developments include:

i. Digital Personal Data Protection Act: This comprehensive legislation aims to establish a framework for data protection and privacy, affecting how businesses handle personal data. Its passage is anticipated to enhance compliance requirements for companies.
ii. Corporate Governance Reforms: New regulations under the Companies Act are expected to enhance transparency and accountability, particularly for listed companies regarding disclosures and related party transactions.
iii. Consumer Protection (E-Commerce) Rules: Further updates are anticipated to strengthen consumer rights in the online marketplace, focusing on fair practices, disclosures and grievance redressal mechanisms.
iv. Micro, Small & Medium Enterprises (MSME) Development Act: Amendments may be introduced to streamline the registration process and enhance benefits for MSMEs, encouraging growth and innovation in this sector.
v. Arbitration & Mediation Framework: Revisions to the Arbitration & Conciliation Act are likely to improve the efficiency of dispute resolution mechanisms, including provisions for emergency arbitration and expedited procedures. A significant lacuna in the ADR framework has been filled with the enactment of the Mediation Act.
vi. Digital Contracts & Electronic Transactions: Updates to laws governing digital contracts and e-signatures may enhance legal clarity and acceptance, facilitating smoother online transactions.
vii. Foreign Direct Investment (FDI) Policy Revisions: Further liberalisation of FDI norms is expected, aimed at attracting foreign investment in various sectors, including defence, retail and technology.

Since we also have a robust family law practice, we are able to advise our clients from both the personal and commercial perspectives, and this has helped our practice grow with many long-term clients.

Responses contributed by Lavanya Regunathan Fischer and Atul Nagarajan.