Outsourcing - BPO
Legal Issues of Offshore Outsourcing to India
If you are considering outsourcing to India, but need some information
on the legal issues in offshore outsourcing or are worried about
whether your contract will be honored by the Indian Legal System,
read on.
Indian Laws on Intellectual Property
Laws in India are always undergoing amendments, according to
the needs of the changing times and in unison with International
Laws and practices.
India has ratified the World Trade Organization (WTO) Agreement,
which came into force on January 1 st 1995 and has also become
a party to the Agreement on Trade Related Intellectual Property
Rights. In the last few years, India has effected several legislative
changes in copyrights, trademarks, designs, patents, and other
issues besides enacting new legislations on bio-diversity and
geographical indications. These measures have drastically reformed
Indian laws on Intellectual Property.
Laws Governing International Contracts
When contracts transcend national boundaries, the national Legal
Regime of any single country becomes inadequate to grapple with
the situation. When the parties to the contract are located in
different countries, at least two systems of law impinge upon
the transaction and the rules of Private International Law come
into play.
The best way to ensure the application of a particular legal
system to international contracts is to choose a particular law
to govern this contract. This law is called the "Proper Law
of the Contract". The Courts have held that "Proper
Law is the law which the parties have expressly or impliedly chosen,
or which is imputed to them by reason of its closest and most
real connection".
Indian courts uphold choice of law
When the parties in the Contract make an express choice of law,
the Indian Courts have always recognized such choice of proper
law. Previously in the US , though Courts generally honored the
law chosen by the parties, the same was limited due to the holding
that there should be some "reasonable relationship"
between the transaction and the chosen law. This created some
uncertainty. This legal quandary was fully removed by the New
York General Obligations Law, which became effective on July 19
th 1984. According to Section 5-1401 of the said Law, parties
are given freedom to select New York as their proper Law regardless
of any relation to New York . However, where parties have chosen
any law other than Indian Law, the choices of law have always
been upheld by the Indian Courts.
Outsourcing parties are free to choose the law that will govern
their contracts.
Under Indian Law, parties are free to stipulate their terms of
contract and lay down the law by which the Contract is to be governed.
Courts in India have held that the intention of parties would
decide the law of which country would govern the Contract and
which Court would have jurisdiction. Sections 13, 15 and 44A of
the Indian Civil Procedure Code and Section 41 of the Indian Evidence
Act, govern the conclusiveness and enforcement of foreign judgments
in India . If there is a reciprocal arrangement between India
and the foreign country whose judgment is sought to be enforced,
then under section 44A of the Indian Civil Procedure code, the
said foreign Decree could be executed as if it were a Decree passed
by the Indian court without the need to file a Suit. If there
is no reciprocal arrangement between the foreign country concerned
and India , then the said Judgment/ Decree can be enforced in
India by filing a Suit on the foreign judgment.
Guidelines to follow while entering International Contracts Companies
enter into International Contracts, as they are always profitable.
The following aspects should be considered while entering into
International Contracts, which would safeguard the interests of
all the parties to the Contract:
• There should be an express choice of Law governing the
Contracts.
• Ensure that the legal regime of the Country whose law is
chosen, recognizes the proper law for enforcement.
• In cases where Contracts are signed in a country which
is different from the country whose law is chosen, it should be
ensured that the formal requirements of that place of Contract
are fulfilled in all respects.
• Where the chosen Law is Indian Law and if Indian Judgment
is to be enforced on any foreign soil, ensure that the said foreign
soil has a similar law on the lines of Section 44A of the Indian
Civil Procedure Code.
• Where Arbitration is chosen as the method of dispute resolution,
the place of arbitration and other aspects have to be properly
determined.
For more reading on Outsourcing, log on to http://www.outsource2india.com
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