A foreign company can generally choose the governing law and dispute forum for a cross-border contract involving India. But a clause saying “English law applies” or “Singapore courts have jurisdiction” does not automatically exclude mandatory Indian law, eliminate the role of Indian courts, or solve the problem of enforcing the eventual judgment or award in India.
The mistake is usually not choosing a foreign law but choosing a governing law, jurisdiction and dispute resolution without considering how the three will work together when a dispute actually arises.
For a wider review of clauses that matter in Indian commercial agreements, see Edvisars’ 5 Clauses Every Commercial Contract in India Must Have Before You Sign.
Are governing law and jurisdiction the same thing?
No. They answer different questions.
Governing law determines the substantive law used to interpret the contract and decide the parties’ contractual rights and obligations.
Jurisdiction decides which authority shall have the power to address the issue in case any dispute arises..
The seat of arbitration is where the parties mutually decide to conduct the process of arbitration. It determines the legal home of the arbitration and has important consequences for the courts exercising supervisory jurisdiction over the arbitral process.
A contract could therefore be governed by Indian law, provide for arbitration seated in Singapore, and ultimately require enforcement of the award against assets located in India.
Treating these concepts as interchangeable is one of the most common drafting problems in cross-border agreements.
Can a foreign company choose foreign law for a contract involving India?
In a genuine cross-border commercial contract, Indian law recognises substantial party autonomy in choosing the law governing the contractual relationship.
In National Thermal Power Corporation v. Singer Company, (1992) 3 SCC 551, the Supreme Court discussed the “proper law” of an international commercial contract and recognised the importance of the parties’ express choice of governing law.
Similarly, in Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd., (2003) 4 SCC 341, the agreement provided for English law and the non-exclusive jurisdiction of English courts, and the Supreme Court recognised the ability of parties to select a foreign court as their contractual forum.
But choosing foreign law does not mean that every Indian statute disappears.
Where mandatory Indian legislation applies because of the subject matter, place of performance, regulatory status of a party or location of assets, the contract cannot simply contract out of those requirements. Section 23 of the Indian Contract Act, 1872 also prevents contractual arrangements whose object or consideration is unlawful or opposed to public policy.
Indian Contract Act, 1872 — India Code
What goes wrong with “exclusive jurisdiction” clauses?
Foreign companies frequently copy wording such as:
“The courts of London shall have exclusive jurisdiction.”
That clause should not be inserted without first asking what happens if the counterparty, evidence or valuable assets are actually in India.
For Indian domestic courts, the Supreme Court has consistently held that where two or more Indian courts otherwise have jurisdiction, the parties may validly select one of those competent courts exclusively. They cannot, however, create jurisdiction in an Indian court that has none under the law.
This principle appears in Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286 and A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, (1989) 2 SCC 163, and was reaffirmed in Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd., (2013) 9 SCC 32. In Swastik Gases, the Supreme Court held that even the absence of words such as “alone” or “exclusive” is not necessarily decisive if the contractual intention to select one court is clear.
Foreign court clauses require a somewhat different analysis. In Modi Entertainment, the Supreme Court accepted that parties may select an exclusive or non-exclusive foreign court. Indian courts will ordinarily take that contractual choice seriously, although exceptional circumstances may justify intervention.
The practical lesson is simple: do not assume that writing “exclusive jurisdiction” automatically answers every question about proceedings in India.
Should foreign companies choose litigation or arbitration for Indian contracts?
For many cross-border contracts, arbitration deserves serious consideration because enforcement of an international arbitral award follows a different framework from enforcement of a foreign court judgment.
Under Part II of the Arbitration and Conciliation Act, 1996, qualifying New York Convention awards may be recognised and enforced in India. Section 44 requires, among other things, that the award arise from the relevant written arbitration agreement and be made in a territory notified by the Central Government for Convention purposes. Enforcement can be refused only on the statutory grounds applicable under Section 48.
Arbitration and Conciliation Act, 1996 — India Code
The Supreme Court has also confirmed in PASL Wind Solutions Pvt. Ltd. v. GE Power Conversion India Pvt. Ltd., 2021 INSC 264, that two Indian companies may choose a foreign seat of arbitration and that an award meeting the statutory requirements can qualify as a foreign award under Part II. Importantly, the substantive law chosen in that particular dispute was Indian law.
Supreme Court judgment — PASL Wind Solutions v. GE Power
For more on selecting the dispute mechanism, see Edvisars’ Arbitration vs Litigation in India: Choosing the Right Forum for Your Dispute.
What if the foreign company obtains a court judgment outside India?
Winning abroad does not necessarily mean that the judgment can immediately be executed against Indian assets.
Sections 13 and 44A of the Code of Civil Procedure, 1908 are central to the analysis.
Section 13 specifies circumstances in which a foreign judgment is not conclusive in India, including lack of competent jurisdiction, absence of a decision on the merits, breach of natural justice, fraud and certain conflicts with Indian law.
Section 44A provides a direct execution mechanism for qualifying money decrees of specified superior courts in territories notified by the Central Government as “reciprocating territories”. Even then, the Section 13 objections remain relevant.
Where Section 44A does not apply, the foreign decree cannot simply be filed for direct execution under that section; the creditor will generally need to pursue the appropriate proceedings in India relying on the foreign judgment, subject to Section 13 and the applicable limitation rules.
Code of Civil Procedure, 1908 — India Code
That enforcement question should be considered before the contract is signed, not after a foreign judgment has already been obtained.
What should a properly coordinated cross-border clause decide?
The clause should answer, separately and consistently:
Which substantive law governs the contract?
Will disputes go to courts or arbitration?
If courts are chosen, is the jurisdiction exclusive or non-exclusive?
If arbitration is chosen, what is the legal seat?
Which institutional or procedural arbitration rules apply?
What language will be used?
Where are the counterparty’s assets likely to be located?
Will the resulting judgment or award realistically be enforceable there?
The clause should also be checked against mandatory Indian regulatory requirements relevant to the transaction.
A foreign company entering India should therefore review dispute strategy alongside its overall contracting and market-entry structure. See Edvisars’ Entering the Indian Market: A Legal Checklist for Foreign Companies and India Entry & Cross-Border Advisory practice.
The drafting mistake to avoid
A clause should not say, for example:
“English law governs; Delhi courts have exclusive jurisdiction; disputes shall be finally settled by arbitration seated in Singapore”
without explaining how those provisions interact.
Such wording may raise unnecessary questions about the governing law of the substantive contract, the arbitration agreement, the supervisory court at the seat, and the intended role of the Delhi courts.
A cleaner contract separates these issues deliberately.
For contracts likely to be performed or enforced in India, the drafting exercise should begin with the commercial reality: where would we actually need to obtain relief, and where are the assets?
That question is usually more important than which jurisdiction sounds most familiar in the template.
Frequently Asked Questions
Can a foreign company choose English law for an Indian contract?
Potentially yes in a genuine cross-border transaction, but mandatory Indian laws applicable to the transaction may still operate. The choice should be reviewed against the particular contract and regulatory framework.
Can parties give exclusive jurisdiction to a foreign court?
Indian law recognises contractual selection of foreign courts. However, the effect of the clause and any request for Indian court intervention depend on its wording and the circumstances. Modi Entertainment is the leading Supreme Court authority.
Can two Indian companies choose a foreign arbitration seat?
Yes. The Supreme Court confirmed this in PASL Wind Solutions v. GE Power Conversion India.
Is governing law the same as the seat of arbitration?
No. Governing law principally concerns substantive contractual rights; the arbitration seat determines the juridical home of the arbitration and its supervisory framework.
Is a foreign court judgment automatically enforceable in India?
No. Sections 13 and 44A CPC must be considered, including whether the judgment originates from a notified reciprocating territory and specified superior court.
Is a foreign arbitral award treated like a foreign court judgment?
No. Foreign arbitral awards are principally dealt with under Part II of the Arbitration and Conciliation Act, 1996, rather than Section 44A CPC.
When should the jurisdiction clause be reviewed?
Before signing. Once a dispute begins, an unclear clause can itself become the first dispute the parties have to litigate.
