Rishabh G. Mastaram

An increase in economic pressures due to the COVID-19 pandemic is prompting investors to seek investment structures on such terms and conditions that they believe would protect them from unforeseeable events.

Although the prospects of cross-border transactions look grim at this stage, investors are exploring opportunities in India as they look to depart China. The investors have varied requirements and prerequisites to safeguard their interest. To address such requirements, evolving investment structures are a must. 

A few investors, promoters and companies are looking to consummate cross-border fundraising and M&A transactions in the digital and technology segment. However, all the stakeholders have an issue in common—selecting their home country as jurisdiction for setting up an entity and conducting business in India. 

More often than not, Indian companies succumb to the foreign investors’ requirement of having an offshore entity as their flagship entity for pooling investments and then have a step-down wholly owned subsidiary in India. 

There are several reasons why foreign investors insist on having a flagship entity in their home county. One major reason is the convenience of jurisdiction, operation and control.

Such a situation leads to multiple complexities and issues for Indian promoters/entities involving incidence of tax, place of effective management, taxation issues, concerns regarding round-tripping and forum for dispute resolution. 

In order to reconcile the differences and yet give adequate comfort to the foreign investors with having an investee entity in India, split contracts can be considered. 

By splitting the contracts, major requirements related to convenience of jurisdiction can be achieved without having an offshore entity. The contracts can include that aspects related to governance of an entity situated in India and all other aspects which are mandatorily to be dealt within the realm of India laws should be governed by Indian laws.

The contracts can specify that for all other commercial and contractual aspects, which are not mandatorily to be governed by Indian laws, parties can agree for a governing law other than India. Also, parties can be free to decide the arbitration forum, seat and place.

The Code of Civil Procedure, 1908 (CPC) governs the procedure for enforcement and execution of decrees in India. The enforcement and execution of the arbitral awards are governed by the Arbitration and Conciliation Act, 1996 as well as the CPC. 

Foreign award

India is a signatory to the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958) and the Geneva Convention (Convention on the Execution of Foreign Arbitral Awards, 1927).

If a binding award is passed from a country which is signatory to the New York Convention or Geneva Convention and the country is notified as a reciprocating country by India, then the award would be enforceable in India.

Such enforcement will be done in two stages. In the first stage, by filing a petition for execution for which the court would determine whether the award passed is in accordance with the Arbitration and Conciliation Act. If it is determined that the award is enforceable then it may be enforced like a decree of the court, unless objected.     

Foreign judgment 

The term “foreign judgment” is defined under section 2(6) of the CPC as: In order to enforce a foreign judgment in India, it is important to check whether the concerned foreign court is situated in a reciprocating country or in a non-reciprocating country. It is important to note that the enforcement of the decree passed by a foreign court situated in a reciprocating country then mere filing of execution proceedings in India is required.

However, a fresh suit should be filed before the appropriate adjudicating authority if the decree is passed by a foreign court situated in a non-reciprocating country. 


It is important to check whether such offshore jurisdiction is a reciprocating country with India as per the CPC. In case of enforcement and execution of arbitral awards, it is important to check that the concerned offshore jurisdiction is part of the Geneva Convention and the New York Convention.

Such checks are a must to ensure ease and expeditious execution of the orders passed by foreign courts or foreign awards, as the case may be, considering the assets and entities are situated in India.

Rishabh G. Mastaram is the founder of law firm RGM Legal. Views are personal.

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