Key points
- The governing law clause decides the substantive rules; the jurisdiction or arbitration clause decides the forum. Both should be checked before any step is taken.
- A foreign judgment from a reciprocating territory can be executed directly in India; others require a fresh suit.
- Letters of credit, Incoterms and bill of lading terms often decide the dispute before any court does.
Governing law
Indian courts give effect to an express choice of foreign law in a commercial contract, provided it is bona fide and not against public policy. Absent a choice, the law with the closest and most real connection applies. For sale of goods, the UN Convention on Contracts for the International Sale of Goods does not apply to India, so the chosen national law governs.
Jurisdiction
An exclusive jurisdiction clause in favour of a foreign court will usually be enforced, and an Indian suit will be stayed. Where no clause exists, an Indian court has jurisdiction if the defendant resides or carries on business in India or if the cause of action arose in India, for example where goods were delivered or payment was to be made. Suing a foreign defendant in India is possible but enforcing the judgment abroad depends on that country's rules.
Arbitration
For most cross-border trade, arbitration seated in a neutral venue with institutional rules is the practical choice, because the resulting award is enforceable in over 170 New York Convention countries, whereas court judgments travel poorly.
Documents that decide cases
The bill of lading terms, the Incoterm chosen, the letter of credit conditions and the inspection certificate typically determine who bore the risk and whether payment was rightly refused. Get them reviewed before sending any notice.
Practical routes
For unpaid export receivables, the options include a demand through the buyer's bank, a claim under ECGC cover, arbitration or a suit in the buyer's country through local counsel, and, where the buyer has assets in India, proceedings here.
Frequently asked questions
Can I enforce a UAE or UK court judgment in India?
Yes. Both are reciprocating territories, so the judgment can be executed under Section 44A CPC as if it were an Indian decree, subject to the Section 13 objections such as lack of jurisdiction or breach of natural justice.
Can a foreign company sue in India without an Indian office?
Yes. A foreign company can sue in Indian courts; it may need to furnish security for costs and should file through a duly authorised representative.
What is the limitation for a suit against a foreign buyer in India?
Three years from the date payment fell due, under the Limitation Act, 1963, regardless of the foreign party's location.
Related practice area: International & Embassy Matters
This article is for general information and does not constitute legal advice. Laws, rules and limitation periods change and depend on the facts; please take advice on your own situation before acting. Reading this article does not create a lawyer-client relationship with Akhtars Legalitarian.