Francisco A. Laguna
Today, we continue our India update, focusing on the recent reorganization of the judiciary.
On 31 December 2015, President Pranab Mukherjee approved The Commercial Courts Commercial Division & Commercial Appellate Division of High Courts Act, 2015 (Act), which is effective as of 23 October 2015. The Act is yet another step in India’s efforts to ease doing business in the country, build confidence and attract foreign direct investment. It will certainly impact both ongoing and future litigation.
Classes of Courts under the Act
The Act establishes three classes of courts.
- First, the existing High Courts of original jurisdiction (Mumbai, Kolkata, Chennai, Delhi and Karnataka) must set up a Commercial Division.
- Second, every High Court will have to establish a Commercial Appellate Division.
- Third, state governments in the remaining states must establish Commercial Courts at the district level.
Threshold Monetary Jurisdiction
The Commercial Courts and Divisions will have jurisdiction over all commercial disputes in excess of INR 1,00,00,000 (~ US$ 150,900) or such higher amount dictated by the Central Government (“Specified Value”).
Section 12 of the Act provides how to calculate the value of the claim. Plaintiffs and counsel should pay careful attention to the valuation provisions in Section 12 to avoid possible allegations of lack of jurisdictions.
Subject Matter Jurisdiction
The Commercial Courts and Divisions will have subject matter jurisdiction over commercial disputes, defined as those arising out of, or related to:
- ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
- export or import of merchandise or services;
- issues relating to admiralty and maritime law;
- transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing thereof;
- carriage of goods;
- construction and infrastructure contracts, including tenders;
- agreements relating to immovable property used exclusively in trade or commerce;
- franchising agreements;
- distribution and licensing agreements;
- management and consultancy agreements;
- joint venture agreements;
- shareholders agreements;
- subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
- mercantile agency and mercantile usage;
- partnership agreements;
- technology development agreements;
- intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
- agreements for sale of goods or provision of services;
- exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
- insurance and re-insurance;
- contracts of agency relating to any of the above; and
- such other commercial disputes as may be notified by the Central Government. Further, a commercial dispute includes a counter-claim filed in a suit if it is a commercial dispute of Specified Value.
Clearly, many of topics now under the purview of the commercial courts are of specific interest to investors.
Next week, we will continue the discussion of jurisdiction over arbitration proceedings and other procedural matter.
TransLegal assists its clients understand and maneuver the often difficult rules and regulations that characterize the Indian legal and regulatory system. Call us with any questions you may have about doing business in India.