Litigation in India

India is a common law country. Most of the courts use English as the court language.

There is single hierarchy of courts in India with the Supreme Court of India at the top.

Arbitration in India & International Commercial Arbitration

Recently India enacted the Arbitration and Conciliation Act, 1996 ("New Law"). The New Law is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration ("Model Law"). Among others, the objectives of the New Law are to harmonize the Indian arbitration law with the Model Law and establish an internationally recognized legal framework for arbitration, consolidate the laws on domestic and international arbitration and conciliation, and enforcement of foreign awards. Another important purpose of the New Law is to encourage arbitration as an alternate dispute resolution process and avoid prolonged judicial process.

Establishing Wholly-owned Subsidiary in India by Foreign Investors

India allows, in many sectors, setting up of subsidiaries in India which are wholly owned by foreign investor, including foreign companies.

There are two ways to form subsidiaries in India:

  • Automatic route; and
  • Special Permission Route

In certain sectors such as information technology, development of integrated townships, mass rapid transport services, export oriented manufacturing, 100% ownership by foreign investors is allowed, subject to certain terms and conditions. However, they have to apply for and obtain permission from government authorities. In certain other sectors FDI up to a specified percentage is permitted under the automatic route, See also FDI in India Sector wise Guide | FDI in Small Scale Sector in India Further Liberalized

In certain other sectors FDI up to 100 is permitted with prior approval of the Foreign Investment Promotion Board ("FIPB")/Secretariat of Industrial Approvals ("SIA).

The obvious advantages of a subsidiary are total control over funding, management and profit share of the business. However, the flip side is that in a subsidiary where the total management is foreign, the advantage of local knowledge of customs and methods is lacking from very outset.