Offshore Outsourcing: Legal Issues

The Indian Courts have always recognized such choice of proper law when the parties in the Contract make an express choice of 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. 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. This legal quandary was fully removed by the New York General Obligations Law, which became effective on July 19 th 1984.

Outsourcing and free choice of the law

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. 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. 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. 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.

Intellectual Property

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. 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. Laws in India are always undergoing amendments, according to the needs of the changing times and in unison with International Laws and practices. And this issue is dealt in this law.

International Contracts and Laws

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. When contracts transcend national boundaries, the national Legal Regime of any single country becomes inadequate to grapple with the situation. 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". 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".

Few important aspects on International Contracts:

1. Make sure that the legal regimes of the Country distinguish the proper law for enforcement.

2. An express choice of Law to direct the Contracts.

3. The place of arbitration and other aspects have to be properly determined where arbitration is chosen as the method of dispute resolution.

4. It should be made sure that the formal requirements of that place of Contract are fulfilled in all respects. In some countries where Contracts are signed it may be different from the country whose law is chosen.

5. If the chosen Law is Indian Law and if Indian Judgment is to be enforced on any foreign countries, i t should be made sure that the foreign soil has a similar law on the lines of Section 44A of the Indian Civil Procedure Code.

6. International Contracts are profitable for companies. The below facts are useful and protect the interests of all the parties.

All the best!