Battling on regardless


‘I fight to the end … I like to try and put pressure on my opponent

Brave words from the new king of chess, Magnus Carlson, who recently beat the reigning champion, India’s Vishwanthan Anand, to win the World Championship in Chennai. Chess aficionados across India held their breath as Anand struggled under formidable pressure, and eventually cracked.

The mind games played in chess may be legendary, but legal advisers attempting to stay ahead of the game will be familiar with similar pressure. On the dispute resolution front, such mind games are routine, while those seeking to resolve disputes in India must contend with the added pressures of delays and other inefficiencies that beset the country’s courts and alternative dispute resolution forums.

IBLJ 1311 LeaderIn this month’s Cover story we focus on commercial arbitration in India, and ask whether it is yet fulfilling its promise as a viable alternative to litigation. The majority of arbitration in India is carried out without the assistance of arbitral institutions, and although this ad hoc approach has many well-known pitfalls, our coverage reveals that the institutions that offer arbitration are yet to make significant headway in attracting cases. The reason could be “an unwillingness to try any new format,” as NL Rajah, a Chennai-based lawyer and director of the Nani Palkhivala Arbitration Centre, suggests.

While this may well be the case, arbitration is facing a much bigger problem in India: the fact that unsuccessful parties in arbitrations are allowed to challenge arbitral awards in court, thereby delaying the enforcement of the award, often indefinitely. This not only detracts from the value of arbitral awards, but totally undermines arbitration as an approach. For what is the point of embarking on a course of action that is supposed to bypass the courts, if in reality you are likely to end up there anyway?

It is perhaps for this reason that companies such as Titan Industries tell India Business Law Journal that they have stopped including arbitration clauses in their commercial contracts. And with arbitration failing to make the breakthrough that was hoped for, Indian companies are still finding themselves battling it out in the country’s courtrooms.

The same, of course, is true for foreign investors in India, as well as for foreign companies that have yet to make inroads into the Indian market. In IP mind games we examine the legal battles that face would-be investors that are enforcing their intellectual property rights in India ahead of making an entry into the country. We also look at the corresponding challenges that face domestic companies that find themselves on the receiving end of such action.

Myriad strategies come into play in what is increasingly a battle of wits between Indian and international companies that are clashing, either over deliberate infringements or the inadvertent use of similar names or marks. As Nandan Pendsey at AZB & Partners remarks, “a lot would depend on whether the Indian company can prove that the mark has been honestly adopted by them”. Yet as Sunil Krishna at Krishna & Saurastri Associates says, if “an entity is vigilant in protecting its IP rights, no one is able to usurp such IP rights”.

In Cellular ambition we move into the digital sphere and examine the risk management strategies that are being contemplated as companies adopt mobile commerce and mobile banking in an attempt to broaden their customer bases. While banks and telecoms companies are obliged to maintain the secrecy and confidentiality of a customer’s account, in the mobile banking scenario the risk of not meeting this obligation is high. Adequate measures to manage such risks and create successful mobile commerce platforms are vital.

The banking industry is also the focus of this month’s What’s the deal?. Here we look at India’s external commercial borrowing guidelines, which the Reserve Bank of India prescribes to protect India from the perils of foreign debt. However, as it stands the guidelines are less than clear on issues surrounding indirect financing from export credit agencies. As a result, these agencies face an uncertain legal regime and consequently the support they provide Indian borrowers is less than robust. This is not ideal and more clarity is badly needed.

India has long been the bastion of a legal process outsourcing (LPO) industry that has successfully challenged the status quo in developed jurisdictions. But as David Chamberlin, the general counsel of Cognia Law, a European LPO, warns in this month’s Vantage point, the country’s position as a leading offshore destination for legal services is under assault. For not only are the clients of Indian LPOs – in-house legal teams and law firms – investing in new destinations, often closer to home, but traditional law firms are getting better at cutting costs as new technologies automate some of the legal work that used to get shipped to India.

These changes, and the threats they pose, are symptoms of a maturing legal market. But do India’s LPO providers have what it takes to adapt and survive? For clues, one may look to India Business Law Journal’s annual Legal Process Outsourcing Awards, the 2013 instalment of which is presented in this month’s Intelligence report. Integreon emerges as the winner of the coveted LPO of the Year Award, and four other service providers join Integreon to share the award for Best Overall LPOs.

But while Integreon is undoubtedly revelling in its success, its CEO has issued a stark warning that may send shockwaves through the LPO industry. Speaking of what has long been a central premise of the LPO business model, Robert Gogel said: “labour arbitrage is no longer a good reason to do business”.