In a seven-year-long legal tussle between wind turbine maker Enercon (India) and its German joint venture partner, Supreme Court ruled that only courts in the country had the right to decide on the issue, even if arbitration takes place abroad.
The ruling is seen as a setback for the German partner which had been keen to have the issue settled in a London court. Experts said that the ruling is also likely to have a broader impact with foreign partners now taking a closer look at the fineprint of their agreements.
The Supreme Court ruled that the "venue" of an arbitration, which is merely geographical location chosen based on convenience of both parties is not the same as "seat" of arbitration, which decides the appropriate jurisdiction.
In 1994, Enercon Gmbh had entered into a joint venture with Mumbai-based Mehra Group to form Enercon (India) to make wind turbines and a technology know-how pact was signed. Initially, the foreign partner had a 51 per cent stake that was later raised to 56 per cent.
When the technology pact expired in 2004, the foreign partner wanted to enforce an intellectual property licence agreement. But a dispute arose after the Indian partner said the JV deal is only a draft agreement and not the final one as claimed by the German firm.
The dispute reached the apex court after exhausting all other legal forums in the country, including the company law board and high courts. Enercon Gmbh did not respond to mail seeking comments, while the Mehra Group was not reachable.
The Supreme Court said even if the agreement is not finalised, the arbitration clause is valid. It also noted that since the deal between the parties and aspects such as technical knowhow and allocation of shares are made under Indian laws, the courts in the country alone have jurisdiction to decide the case.
Article referred: http://economictimes.indiatimes.com/news/news-by-industry/energy/power/enercon-saga-only-indian-courts-have-final-say-in-arbitration-proceedings-rules-supreme-court/articleshow/31025100.cms
The ruling is seen as a setback for the German partner which had been keen to have the issue settled in a London court. Experts said that the ruling is also likely to have a broader impact with foreign partners now taking a closer look at the fineprint of their agreements.
The Supreme Court ruled that the "venue" of an arbitration, which is merely geographical location chosen based on convenience of both parties is not the same as "seat" of arbitration, which decides the appropriate jurisdiction.
In 1994, Enercon Gmbh had entered into a joint venture with Mumbai-based Mehra Group to form Enercon (India) to make wind turbines and a technology know-how pact was signed. Initially, the foreign partner had a 51 per cent stake that was later raised to 56 per cent.
When the technology pact expired in 2004, the foreign partner wanted to enforce an intellectual property licence agreement. But a dispute arose after the Indian partner said the JV deal is only a draft agreement and not the final one as claimed by the German firm.
The dispute reached the apex court after exhausting all other legal forums in the country, including the company law board and high courts. Enercon Gmbh did not respond to mail seeking comments, while the Mehra Group was not reachable.
The Supreme Court said even if the agreement is not finalised, the arbitration clause is valid. It also noted that since the deal between the parties and aspects such as technical knowhow and allocation of shares are made under Indian laws, the courts in the country alone have jurisdiction to decide the case.
Article referred: http://economictimes.indiatimes.com/news/news-by-industry/energy/power/enercon-saga-only-indian-courts-have-final-say-in-arbitration-proceedings-rules-supreme-court/articleshow/31025100.cms
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