It would be easy for finance counter-parties to panic on
seeing the recent decision in Venture Global Engineering v
Satyam Computers Services. But though the decision reveals
an interventionist approach by the Indian judiciary, it is not
such a big cause for concern. While certain drafting changes
should now be incorporated in India-related arbitration
agreements, it is not necessary to avoid arbitration
altogether. Indeed, international arbitration (that outside
India), viewed against the alternative of court litigation, is
still the most preferable method of resolving India-related
disputes for finance counter-parties. It provides quick,
neutral adjudication and decisions that are still the most
readily enforceable in India.
Financial institutions investing in India need to agree
contractual documentation that sets out the full extent of
their legal rights and provides an appropriate dispute
resolution mechanism if things go wrong. For finance agreements
where India-domiciled parties are involved or where assets are
located in...