Why more Indian business disputes are settled elsewhere

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Narendra Modi's administration sees the growing trend as an infringement of India’s sovereignty and meddling in its legal system

and Cairn Energy operate in different industries: e-commerce, telecoms and oil-and-gas exploration, respectively. But they share a common predicament. All are waging legal battles over their Indian operations—and doing so outside India.

Narendra Modi, the prime minister, is believed to dislike this trend. His administration sees it, with reason, as an infringement of India’s sovereignty—but also as impugning its laws and judicial process. The resistance to outside meddling in the country’s legal affairs is echoed by its bar association, which blocks foreign lawyers and law firms from practising locally.

The emigrant cases can be divided into two categories. The first kind involve the Indian government. Vyapak Desai of Nishith Desai Associates, an Indian law firm with expertise in the area, has compiled a list of more than a dozen big cases pending. Some were brought by Indian firms. In 2017 Reliance Industries, a conglomerate famous for ably navigating India’s courts and bureaucracy, chose Singapore as the venue to fight a $1.

On the other hand, it fears that rejecting arbitration would reinforce the sense that India is a toxic place for foreign firms to invest. Appealing against a decision—let alone ignoring it—brings costs, not least by putting off investors at a time when Mr Modi is keen to lure them away from China.

 

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