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Freshfields Risk & Compliance

| 2 minutes read

Insights from Freshfields’ India roundtable on “legal practitioners’ perspective on disputes and compliance”

On 19 March 2024, Freshfields Bruckhaus Deringer, Trilegal, and the Indo-French Chamber of Commerce and Industry organised a roundtable on legal practitioners’ perspective on disputes and compliance regimes in India and France.  The roundtable was generously hosted by the Embassy of India in Paris.  The panellists were Vasuda Sinha, and Stuti Gadodia from Freshfields and Trilegal’s Anuj Berry, Rajat Jariwal, and Varuna Bhanrale.  The panel was moderated by Trilegal’s Ashish Bhan.  The panel offered practical insights to assist French and Indian companies in navigating contentious situations and compliance issues when doing business in India and France, respectively.

India’s appeal for foreign investors 

At the outset, the panel underscored India’s attractiveness as an investment destination and the opportunities it provides, particularly in the manufacturing, banking, healthcare, and energy sectors. It was also noted that India has sought to streamline and digitalise regulatory compliance by removing over 39,000 compliance requirements and eliminating the criminal component of more than 3,400 provisions related to technical or procedural defaults.

The enforcement of obligations: opportunities and challenges

A key concern of foreign investors everywhere is whether and how private rights and obligations will be enforced locally. The panellists reminded parties doing business in the Europe-India corridor of key differences in these areas between civil and common law countries.

Beyond that, it was noted that in the last ten years India’s reputation for contract enforcement and predictability had significantly improved.  The transformation could be attributed to: (i) the improved dispute resolution process – with arbitration becoming the preferred mode of resolving commercial disputes, (ii) the judiciary, which frequently grants interim relief and specific performance; enforces arbitration clauses and upholds arbitral awards; values strict compliance with anti-bribery and corruption (ABAC) and anti-money laundering (AML) obligations, and (iii) reforms in ESG compliance.

Notwithstanding the strides made on the Indian side, parties operating in the corridor may continue to value the long-standing predictability in the enforcement of obligations offered by European jurisdictions.  At least some of this comfort derives from universally applicable rules or regulations regarding the enforcement of both foreign court judgements and arbitral awards locally.  The rise in popularity of local commercial courts, particularly as an alternative to private international commercial arbitration, was also discussed.

Doing business in the corridor: what should investors be aware of

While doing business in India continues to become easier for foreign investors, it can nevertheless be a challenging country in which to operate.  Investors should be aware that business practices, laws and regulations can differ across India’s many local jurisdictions.

Additionally, a focus on strict compliance with ABAC and AML laws requires in-depth due diligence at the pre-investment stage and continuous legal support.  The same goes for the ever-evolving domain of ESG regulations. 

As for Indian companies coming to Europe, the speakers highlighted that ESG regulations continue to evolve in the European context also, and that Indian companies must be diligent in following all developments to ensure compliance.  Sustainable business-related practices are an important focus, as are reporting obligations.

The speakers also noted that changes were afoot in relation to the trade and investment agreements applicable in the corridor, following India’s termination of the majority of its bilateral investment treaties (BITs).  India and the EU are currently negotiating a Free Trade Agreement (FTA) that may contain broader investor protections for foreign investors than those provided in India’s 2016 Model BIT.  The negotiations will determine the fate of the FTA’s dispute settlement mechanism, particularly in relation to whether it will preserve arbitration as the forum or whether the parties will implement a permanent investment court system of the kind envisaged by the Canada-EU Comprehensive Economic and Trade Agreement. 

Road ahead

The roundtable concluded by noting the upwards trend in the Indo-French relations on both diplomatic and business fronts.  The disputes and compliance regimes in both the countries will have a significant role in strengthening further their strategic partnership and bilateral relationship.