We are pleased to present the India chapter of the Global Investigations Review’s Guide to International Enforcement of the Securities Laws (Second Edition). The India chapter has been authored by Niti Dixit, Shahezad Kazi, Zahra Aziz and Gladwin Issac, all lawyers at S&R.
The India chapter provides information on relevant statutes and the government authorities responsible for investigating and enforcing them, conduct most commonly the subject of securities enforcement, and legal issues that commonly arise in enforcement investigations in India.
Negotiations between the EU and India in respect of a significant trade and investment deal are currently ongoing. This EU-India deal involves three separate agreements: (1) a free trade agreement (FTA), (2) an investment protection agreement (IPA), and (3) an agreement on geographical indications. Of particular interest is the proposed investment court system (ICS) in the IPA. Although ICS marks a break from standard dispute-resolution mechanisms under investment treaties, it has been used by the EU in the past across FTA-plus deals signed with Canada, Vietnam, and Singapore. Previously, investor-state arbitration (ISA) was the standard template for resolving international investment disputes. Now, the EU wants to include ICS in all its future treaties. While it remains to be seen whether ICS offers a superior paradigm relative to ISA, the EU itself has argued, including before UNCITRAL, that ICS will ensure a more consistent jurisprudence and improve judicial accountability. Nevertheless, as India looks to export more capital in the future, whether ICS will be able to protect investors better in the long run is something that India needs to think about.
On August 29, 2022, the Delhi High Court set aside an arbitral award from 2015 issued by the International Chamber of Commerce in the Antrix-Devas dispute. While the High Court’s verdict is being hailed as a significant win for the Indian government, it is also time that India became more proactive in global debates related to foreign investment and learnt how to avoid such defensive situations in the first place. This note discusses why India should start asserting itself as a key player in the international investment regime and identifies the areas in which it has been falling short in this regard, including, in particular, in respect of its corresponding dispute resolution system.
There is, often, a complex interplay between transnational legal standards for the enforcement of commercial contracts and various domestic legislations. One such category of legislations in India which affects, and sometimes delays, the enforcement of arbitration agreements are legislations relating to collection of stamp duty, in particular the Indian Stamp Act, 1899 and certain state-specific legislations relating to collection of stamp duty (collectively, the “Stamp Duty Law”). Under the Stamp Duty Law, an insufficiently stamped instrument is liable to be impounded. Further, until such an instrument is sufficiently stamped, the instrument remains inadmissible in evidence. What then is the fate of an arbitration clause within an instrument that is either not stamped or insufficiently stamped? Will the relevant authority before which such instrument is presented under the provisions of the Arbitration and Conciliation Act, 1996 refuse to refer the parties to arbitration; appoint an arbitrator; grant interim relief sought by the party? Or, would the separability doctrine (that an arbitration agreement is separate and distinct from the substantive contract in which it is contained) salvage such an arbitration clause?
Material Adverse Effect (“MAE”) clauses are once again in focus with the recent Musk-Twitter dispute arising from the termination of the transaction related to the acquisition of Twitter on MAE grounds. This note discusses certain issues relating to MAE clauses from a practical perspective in an M&A setting and how these clauses have been interpreted by courts in the past.
India has witnessed a significant increase in institutional shareholder activism over the past few years. As a consequence of the rapid rise in shareholder activism, there has been much greater focus on the rights of minority shareholders in relation to a company. In this context, the judgment of the division bench of the Bombay High Court on March 22, 2022 in Invesco Developing Markets Fund v. Zee Entertainment Enterprises Limited addresses two key issues: (i) the statutory right of shareholders to call a shareholders’ meeting and (ii) the appropriate judicial forum for such shareholder disputes.
We are pleased to share the India chapter of the Global Investigations Review’s Guide on International Enforcement of the Securities Laws (First Edition). The India chapter has been authored by Niti Dixit, Shahezad Kazi, Dhruv Nath and Zahra Aziz with assistance from Muizz Drabu and Gladwin Issac, all lawyers at S&R. The India chapter provides information on relevant statutes and the government authorities responsible for investigating and enforcing them, conduct most commonly the subject of securities enforcement, and legal issues that commonly arise in enforcement investigations in India.
Recently, pursuant to its decision in Ebix Singapore Private Limited v Committee of Creditors of Educomp Solutions Limited and Anr., the Supreme Court of India extensively analyzed the status of a resolution plan approved by the Committee of Creditors but pending approval of the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016. The Supreme Court observed that such a resolution plan binds the Committee of Creditors and the Resolution Applicant and reinforced the strength of the decision of the Committee of Creditors in favor of a resolution plan. The Supreme Court also, once again, clarified the scope of scrutiny, at the stage of approval of a resolution plan, by the National Company Law Tribunal and consequently by the National Company Law Appellate Tribunal.
Recently the Standing Committee on Finance in a report placed before the Parliament on August 3, 2021 proposed a Code of Conduct for the Committee of Creditors in a corporate insolvency resolution process under the Insolvency and Bankruptcy Code. Following such report, the Insolvency and Bankruptcy Board of India has published a discussion paper on August 27, 2021 which includes, among other things, a draft Code of Conduct. This note considers an alternative approach for such a Code of Conduct.
By an order dated July 19, 2021, the National Company Law Appellate Tribunal (the “NCLAT”) stayed the operation of the order of the National Company Law Tribunal (the “NCLT”) which had approved a resolution plan in relation to the Videocon group. In staying the operation of the NCLT’s order, the NCLAT appears to have been influenced by the observations of the NCLT on two points, a substantial haircut and a breach of confidentiality. Apart from these two points, this note considers a possible shortcoming in the NCLT order in relation to treatment of dissenting creditors.