Foreign Arbitration Does Not Escape Indian Law | Doing Business in India | Episode 33

Your contract may appear airtight on paper. But, what actually happens when you try to enforce a provision that is legally doubtful or potentially void under Indian law?

In this episode of the Veyrah Law series, Ajay Joseph (Partner at Veyrah Law) walks through how enforcement actually plays out depending on where a dispute lands: an Indian court, domestic arbitration, or foreign-seated arbitration such as LCIA London or SIAC Singapore.

Indian courts can examine the legality of contractual provisions, and a party resisting enforcement can raise illegality as a preliminary argument. Domestic arbitral tribunals can grant enforceable interim protection, but where Indian law governs the contract, the same illegality arguments remain relevant.

Foreign-seated arbitration does not make these issues disappear. Interim measures granted by a foreign-seated tribunal are not directly enforceable in India under the Arbitration and Conciliation Act, 1996. Further, where Indian law governs the contract, the foreign tribunal must still address the same Indian-law restrictions.

Even a final award in an investor's favour can face resistance at the enforcement stage on the ground that enforcement of a provision meant to defeat the provisions of law would violate the fundamental public policy of India. The episode examines this question and what it means for investors structuring contracts involving India.

The episode closes with five practical recommendations: assess what is cleanly enforceable before signing, avoid remedies, to the extent possible, dependent on counterparty performance, build practical enforcement mechanisms, use structures that are clearly legal, and price in risks that cannot be eliminated. Where a genuine dispute arises in an Indian context, the episode also explains why settlement may often be preferable to prolonged enforcement litigation.