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The rise of Indian disputes in London - Ishaan Bhardwaj

Introduction


India’s economy has enjoyed stellar growth over this past decade. The IMF has estimated that it will become the world’s third-biggest economy by 2030. Historically, London has been the pre-eminent centre for arbitration and litigation for many large-scale Indian disputes. The main thesis of this article is that London will continue to go from strength to strength in Indian disputes. London’s stature will only be reinforced by India’s economic rise and its integration into global trade networks. Particularly salient for London will be the growth of a worldwide Indian business community or diaspora as a function of India’s economic development and trade with neighbouring regions in Asia. This global Indian business community will operate out of regions like the UAE, Singapore and of course, London.


To thrive, any dispute resolution centre needs to be commercially sensitive. This, for example, is why arbitration is so attractive. The procedure is private and confidential with no ‘washing of dirty laundry in public,’ according to Mr. Khaitan, name partner of an India-wide law firm, at a recent Indian arbitration conference. Furthermore, it allows for flexibility of procedure and speed that might be more attuned to ‘commercial’ sensibilities than court-based processes, with experts more easily selected to resolve disputes with technical expertise of a particular sector. The slowness and bureaucratic red tape of Indian court procedures is a significant factor pointing to resolving disputes in London.


However, this cannot be grounds for complacency as there is clearly growing competition from other dispute resolution hubs. Nonetheless, it is submitted that London has enduring advantages which will enable it to flourish. The assumption that the competition between centres threatens London in a globalised world will also be questioned. In reality, London stands to learn and gain from the success of jurisdictions like Singapore or Paris.


Why London? An Enduring Appeal


English law remains critical to facilitating and structuring the economic development of many developing countries, of which India will be the largest and most prominent example in the decades to come. The two case studies below show this.


Case Study 1: State Bank of India & Ors v Vijay Mallya [2018] EWHC 1084 (Comm)


Recent debt enforcement claims involving Vijay Mallya, the former boss of the insolvent Kingfisher Airlines, have been pursued in English courts, including a £1.145 billion debt claim. The airline, established in 2005, saw its debt grow beyond $1.35 billion by 2015, one of its main creditors being the State Bank of India.


The High Court in this case dealt with two distinct issues. The first was the registration of a judgment of the Bangalore Debt Recovery Tribunal (DRT) and whether it could properly be registered under the Foreign Judgments (Reciprocal Enforcement) Act 1933 in England and Wales. The second was whether a worldwide freezing order should be set aside. The order had been secured up to the value of £1.145 billion, on the grounds that there was a real risk that, without a freezing order, the judgment would go unsatisfied as Dr Mallya would dissipate his assets. On both accounts, the Court found against Mr Mallya.


The Registration Order was made under the 1933 Act, applying to India through the Reciprocal Enforcement of Judgments (India) Order 1958. Under paragraph 4 of the 1958 Order, a “court” (including tribunals) for the purposes of the 1933 Act includes “all other Courts whose civil jurisdiction is subject to no pecuniary limit” but the judgment had to be sealed with a seal showing the “jurisdiction of the Courts is subject to no pecuniary limit”.


The Court held that the purpose of the 1958 order was to extend the reciprocal enforcement regime to appropriate Indian courts; it would be wrong to take an unduly narrow or technical approach. This judgment was the first reported case of the DRT registered in English courts. This decision signalled a pragmatic ability to register Indian judgments with the English High Court, to enable enforcement against assets in England and Wales. This is doubly significant as India’s debt recovery laws are mandatory statutes and such debts must be brought before the DRT.


This case demonstrates the increased profile of London for pursuing politically sensitive claims involving allegations of fraud and corruption. It reflects a level of trust in senior English judges' neutrality and commercial experience. Enforcement is pragmatic, supporting London as a jurisdiction to bring billion-dollar Indian debt claims.


Case Study 2: Bank of Baroda and ors v GVK and ors [2023] EWHC 2662 (Comm)


This mammoth case decided barely a month ago demonstrates the upward trajectory of Indian disputes in London. Here, a consortium of six Indian banks won a seismic US$2 billion debt recovery case against GVK, a Singaporean-registered but Indian-operating company, in the English courts.


The evidence handled is notable, including the written evidence of two senior Indian judges, Justice Sen of the Indian Supreme Court and Justice Gupte of the Indian High Court, on issues of Indian law. This case illustrates the ability of London to litigate issues involving Indian law experts at the highest levels, involving tectonic sums, with significant implications for a fast-growing, developing economy.


A principal issue was whether a moratorium on debt repayments by the Reserve Bank of India applied. The claimants were foreign branches incorporated in the Middle East, including Bahrain, of Indian banks. The defendants were incorporated in Singapore. Mr Justice Sen argued that the companies were all Indian. He argued that “the Claimants are all banks incorporated in India, having registered offices in India, and as such are Indian entities” at [85]. The foreign branches could not constitute separate legal entities. The Claimants disagreed on a technical distinction; whilst foreign branches of Indian banks were subject to the Reserve Bank of India, they were not subject to Indian laws. Thus, the Reserve Bank moratorium did not extend to foreign borrowers.


This case reflects the core thesis of this article. As India globalises and becomes embedded in regional Asian trade networks, the Indian diaspora operating out of regions like the Middle East and Singapore will be key future clients for London. This large-scale litigation involving Indian parties reflects the story of India becoming embedded in global trade networks and the growth of a genuinely international business community.


Case Study 3: Global Competition from Rival Centres: A Discussion with Anurag Bana of the International Bar Association (IBA)


London remains a bastion of Indian disputes. This cannot be grounds for complacency. To explore this further, I interviewed Anurag Bana, Senior Lawyer at the International Bar Association (IBA) in London. As an Indian-trained lawyer having studied the BCL at Oxford, and residing in London for decades he has lived experience of how Indian disputes have evolved. Three key points emerged from our discussion.


1. Why Indian businesses have chosen London for decades


Common law and English legal history provide a predictable set of rules for Indian businesses. Quick resolution of disputes and contract enforcement frees businesses to focus on productive economic activity. Courtroom rules, like civil procedure rules, are practical and highly detailed. English courts have increasingly recognised the patterns and drivers underlying Indian disputes. As many Indian courts are backlogged with cases and delays, London offers an efficient, commercially tailored solution. In Anurag’s experience for many Indian businesses, London resembles the “29th state of India” with a long-established business community of Indians in London, encouraging litigation and enforcement in the jurisdiction itself.


2. Legal certainty


Trust is critical; English law provides the well-oiled machinery to encourage this confidence. Furthermore, London provides certainty for every stage of the litigation cycle. This begins with negotiation, settlements, and interim measures and culminates in enforcement. London has specialised legal services to cater to every stage. Anurag's key point was that London courts have benefited from decades of “experimentation and learning”. I agree. It is easy to underestimate the infrastructure needed to support complex, multi-stage litigation, from negotiation to enforcement between international parties.


3. Rival centres


India is setting up arbitral centres domestically and in High Courts in Delhi and Mumbai. The Delhi International Arbitration Centre held its first-ever edition of Delhi Arbitration Weekend in February 2023 where UK legal practitioners were invited to participate and present together with key representatives from the London Court of International Arbitration.


However, we both agreed London is an established centre that has dealt with challenges and responded over decades of experience. History is a competitive advantage, with London having institutional expertise in trying and working through setbacks. Singapore has a tradition of continual technological innovation, with a practice of proactively marketing itself to Indian clients, including major regional cities and states such as Bangalore and Gujarat. It is geographically more favourable for many domestic Indian clients. However, it is worth noting that many Indian clients doing business in England and Europe will likely favour London. Singapore’s attraction often remains regional to Asia itself, with usually fewer disputes from the US, Latin America, Europe, or Africa. As India develops and the business operations of its citizens and diaspora expand to regions further afield, like Latin America or Africa (just as the US and China have), London will appeal in a way Singapore cannot.


Anurag raised the point that London’s influence in India disputes was secured through English the expertise of its judges. Retired English judges are sought worldwide. Work in those jurisdictions demonstrates the pervasiveness of the influence of London, with a diffusion of English legal expertise via a quorum of English judges. Similarly, Indian clients place a high premium on the expertise of the English commercial court judiciary.


Conclusion: Beyond Zero-Sum Competition


London retains many lasting competitive advantages. English commercial law is world-renowned for its certainty and its judges' impartiality; this is why it continues to govern business contracts in India. The pool of talent in London provides another draw, with some of the best lawyers not just from England but also overseas legal graduates from other common law jurisdictions. This is supported by the data. The Portland Commercial Courts Report 2023 identified Indian clients as making the top five nationalities of litigants in the London Commercial Courts, ranking at number four. India, with 44 litigants, was singled out, particularly as having “sharply increased”.[1]


This is inescapably founded on the broader trend that London is increasingly attracting Indian business, talent, and capital as UK-India trade ties strengthen. As Shankh Sengupta argues, Indian entities and individuals have more assets in the UK than ever before. This is a decisive factor for initiating proceedings in cases of “recovery and enforcement of awards”.[2] The UK’s Department for International Trade (DIT) revealed India was the second largest investor in the UK per 2021/2022 figures, just behind the United States. This can be expected to grow following the conclusion of UK-India trade talks. Industries like steel, banking, and jewellery figure prominently here. My prediction is that these pull factors will result in Indian disputes coming to London only rising in number, scale, and legal complexity.


The two case studies examined in this present article furnish excellent examples. The first politically sensitive case involving Vijay Mallya demonstrates the neutrality with which Indian clients, even state-owned banks, view the English courts in dealing with billion-dollar issues of fraud. The second, a recent and colossal debt claim, illustrates how Indian companies registered across Asia and a global Indian business community will be critical litigants in London courts. Billion-dollar disputes reflect the problems of debt-fuelled bubbles that often afflict fast-growing emerging economies. As India integrates more tightly into the global economy, it will not just be India-domiciled companies but a diverse range of subsidiaries and diaspora-owned companies across Asia and worldwide that come to London to litigate.


The rise of India is about more than just seeing rising centres like Singapore as a challenge but as healthy competition, a point Lord Neuberger made clear in June 2022 at a talk hosted by One Essex Court. The zero-sum debate of pitching one jurisdiction against another is a sterile one. Multi-jurisdictional work, particularly with regard to enforcement, will be crucial for Indian disputes in London, and involve collaboration with other jurisdiction. The "pie" of Indian disputes will grow enormously as India develops over the next few decades, the global Indian business diaspora builds businesses or registers companies overseas, and India becomes closely integrated into regional trade networks. In a globalised world, with parallel litigation proceedings in many jurisdictions, and many more Indian clients operating globally, one jurisdiction’s loss is not always another’s gain.


[1] Portland Commercial Courts Report 2023, page 13 [2] Portland Commercial Courts Report 2023, page 14


Cover photo Credit: Getty Images/iStockphoto Copyright: Studio-Annika

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