In recent years, there has been a notable increase in the use of alternative dispute resolution methods in corporate litigation in India, particularly in cases involving insolvency and bankruptcy. There is also a growing emphasis on structured and specialised mechanisms for resolving cross-border corporate disputes. These trends indicate a shift towards more efficient, specialised, and structured approaches to corporate litigation in India.
What are the key stages of corporate litigation in India, and how long does each stage typically take?
Corporate litigation is a wide terminology used in relation to several types of disputes initiated and/or defended by corporates. The key stages of litigation would necessarily depend upon the forum where the dispute is being adjudicated viz. National Company Law Tribunal, Commercial Court, or through Arbitration. In case of commercial disputes under the Commercial Courts Act, 2015, the first stage is pre-institution mediation and settlement under Section 12A. However, in cases where parties contemplate seeking urgent reliefs, then they may directly approach the court by filing an application for interim reliefs. Similarly, when a contract provides for an arbitration clause, the first stage would necessarily be invocation of arbitration. However, when parties contemplate seeking urgent interim reliefs, they can approach the jurisdictional District Court/High Court for interim reliefs under Section 9 of the Arbitration and Conciliation Act, 1996. In other words, in any commercial disputes one of the key stages is seeking/applying for interim reliefs as that necessarily dictates the way and manner in which the dispute will progress. As far as the timelines are concerned, the same depends on several factors being the type of dispute, the forum before which the dispute is being adjudicated, etc. For instance, the Arbitration and Conciliation Act, 1996, provides that an award must be made within a period of 12 months from the date of completion of pleadings, which can be further extended in the manner provided in the act.
What are the common grounds for corporate litigation in India, and how can businesses mitigate these risks?
As mentioned above, the term corporate litigation is extremely wide and involves several types of disputes. Some of the common grounds for corporate litigation in India are disputes arising between a company and its shareholders or different factions of shareholders, breach of contract by counter parties, infringement of intellectual property rights, employment/labour disputes, dispute between co-owners/partners, regulatory non-compliance. While it may not be possible to completely alleviate the possibility of a dispute, however one of the foremost ways to mitigate the risk of dispute is ensuring that the agreement/contracts are drafted in a manner which completely captures the commercial/legal understanding between the parties and are not ambiguous in nature. Furthermore, in cases of disputes emanating from breach of contract, it is advisable for the parties to provide for a cure period for the breaches, within the contract itself. It is also advisable that the contract should provide for good-faith discussion period prior to initiation of any legal proceedings. Further, corporates must also have robust IP protection policies, follow all relevant regulatory requirements, conduct regular legal audits and consult with legal experts for complex issues. To mitigate risk of litigation, parties may also consider putting in place a team of professionals or engage external experts to prepare for foreseeable litigations, so as to mitigate losses pursuant to such litigations.
How does the Indian legal system handle cross-border corporate litigation, and what are the challenges involved?
It is misconstrued internationally that complex commercial litigation before Indian courts can be a challenging experience. However, courts in India have powers to execute decrees passed by courts in reciprocating territories such as United Kingdom, Singapore, Hong Kong, UAE etc., however, if a decree is passed by a court in a non-reciprocating territory, then the same cannot be executed by any court in India. In such case, foreign parties can file a fresh civil suit in Indian court of competent jurisdiction (i) on the basis of the decree passed by the foreign court, or (ii) on the original underlying cause of action, or (iii) on both. Furthermore, in international disputes there are various issues that can be raised by the parties to the dispute, including jurisdiction of the court, difference of procedures, challenge to enforcement of orders/decrees. Thus, it is advisable that international contracts provide for resolution of disputes by adopting the rules and procedures of institutional arbitration centres such as SIAC, LCIA, ICC, etc. Further, the dispute resolution clause in such contracts should clearly set out the governing law, jurisdiction, and procedure governing any disputes arising out of, or in relation to, such a contract.
What are the recent trends and developments in Indian corporate litigation, and how might they impact future cases?
Some recent trends in corporate litigation have been resolution of the dispute through methods like arbitration and mediation. Further, developments in the Insolvency and Bankruptcy Code have led to various financial institution invoking jurisdiction of National Company Law Tribunal for initiation of Corporate Insolvency Resolution Process against their debtors. These trends may lead to more efficient dispute resolution, reduced litigation costs, and greater accountability in corporate practices, potentially shaping future cases towards quicker and more transparent outcomes.
What are the key factors that should be considered to arrive at a favourable outcome in a corporate litigation?
The two key factors that decide the outcome of any litigation are strategy and tactics. Just like in a game of chess, a lawyer must not only anticipate the opponents next move but also must be prepared for all possible variations. As the saying goes “Every battle is won before it's ever fought.” Similarly, most of the litigations are won or lost before the parties reach court. Hence, due weightage must be given to pre-litigation strategy. Therefore, the parties should ideally approach their lawyers at the very first instance when they anticipate a possible litigation. This will help the lawyers to devise a comprehensive legal strategy to obtain favourable outcome. Further, all future correspondence which will be exchanged between the parties can be in furtherance of well-drawn and discussed legal strategy which will be eventually assist the parties when the matter goes to court.
