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Cross-border contracts are the backbone of India’s global business activity. These agreements are fully recognised in India if they comply with the Indian Contract Act, 1872, and clearly state the governing law, jurisdiction, and dispute-resolution mechanism.

The governing law defines how the contract will be interpreted, while the jurisdiction clause identifies which court or tribunal can hear disputes. An arbitration clause, where included, gives the parties a neutral and faster alternative to court litigation and ensures that awards can be enforced both in India and abroad.

Indian courts have steadily adopted a pro-enforcement approach. Decisions in recent times show how courts now respect party autonomy and uphold foreign judgments and arbitral awards under Sections 13 and14 of the Code of Civil Procedure and Part II of the Arbitration and Conciliation Act, 1996. In simple terms, a cross-border contract will stand up in India if it is valid, clearly drafted, and compliant with regulatory and foreign exchange laws.

If you are negotiating or drafting one, this guide breaks down exactly how to structure your governing law, jurisdiction, and arbitration clauses so that they remain enforceable both in India and overseas.

I have also shared a short version of this post on LinkedIn. This detailed guide expands that discussion for anyone dealing with cross-border contracts.

INTRODUCTION

India has quietly become one of the world’s busiest hubs for cross-border contracting. In the last decade, the country has moved from being a service provider to a global business partner in technology, manufacturing, infrastructure, and capital investment.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), India received USD 81.04 billion in foreign direct investment (FDI) in the financial year 2024–25. A 14 percent jump from the previous year. The official press release published by the Press Information Bureau (PIB) notes that cumulative FDI inflows from April 2000 to September 2024 have crossed USD 1 trillion, showing how deeply integrated India has become with global capital and trade flows.

The World Bank’s India Development Update (September 2024) by World Bank Report, 2024) further highlights that India’s role in global trade and services is expanding faster than any major emerging economy, supported by resilient domestic demand and the continued growth of professional and IT services.

With this scale of investment and trade comes a surge in cross-border commercial agreements technology outsourcing, pharmaceutical collaborations, franchise arrangements, venture funding, and international supply contracts. The contractual value of these deals now runs into hundreds of billions of dollars each year. As the number of such agreements rises, so does the need for predictable, enforceable dispute-resolution frameworks.

In nearly every transaction that involves an Indian entity, the arbitration clause becomes the linchpin. It determines where and how a dispute will be heard, what procedural law applies, and whether an arbitral award rendered overseas can be enforced in India. When the clause is clear, disputes are resolved efficiently. When it is ambiguous, even the most commercially sound deal can end up in years of litigation.

Given this backdrop, the Arbitration and Conciliation Act, 1996 and a line of recent Supreme Court decisions from BALCO to Amazon v Future Retail form the legal foundation for any business that operates across borders. This article breaks down that framework, explains how Indian courts view cross-border arbitration clauses, and shows how to draft clauses that stand up to enforcement in India in 2025 and beyond.

If you’re preparing to bring investors on board, explore SolvLegal’s Cross-Border Contracts Blog Cluster, designed by legal professionals to help founders structure equity, control, and exit rights with clarity and confidence.

HOW INDIA’S ARBITRATION LAW APPLIES TO CROSS-BORDER CONTRACTS

To craft an arbitration clause that can be enforced in India when a cross-border dispute arises, one must first understand how the Indian legal framework operates. The backbone is the Arbitration and Conciliation Act, 1996 (the “Act”). The Act is designed to incorporate both domestic and international arbitration rules and to align India’s practice with global standards. You can access the official statute here: Arbitration and Conciliation Act, 1996 – Government of India.

Part I: When the Seat of Arbitration is in India

When parties designate India as the seat of the arbitration, Part I of the Act becomes operative. This means the Indian courts and Indian procedural law (under the Act) will apply. The key sections to note under Part I include:

Section 2(1)(f): Defines “international commercial arbitration” to capture cases where at least one party is foreign, or a foreign‐controlled entity is involved.

Section 9: Allows an Indian court to grant interim relief before or during an arbitration if necessary.

Section 17: Empowers the arbitral tribunal to grant interim or conservatory measures once constituted.

Section 34: Provides for setting aside an award made under India‐seated arbitration.

Because of this structure, if your cross-border contract has the seat in India, you retain access to Indian courts for interim relief, tribunal support and award challenge under familiar rules.

Part II: When the Arbitration Is Seated Outside India

If the contract sets the seat of arbitration outside India, then Part II of the Act governs how the resulting award may be recognised and enforced in India. Part II has two main chapters:

Chapter I (Sections 44-52): Deals with enforcement of awards under the New York Convention.

Chapter II (Sections 53-60): Covers awards under the Geneva Convention.

India is a party to the New York Convention, and the Act requires that, for enforcement of a foreign award, the seat country must be one notified by the Government of India as a reciprocating territory.

A landmark ruling in this respect is Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, where the Supreme Court held that Part I would not apply to arbitrations seated outside India. In other words, the seat determines which part of the Act applies Indian court supervisory powers under Part I only exist if the arbitration is seated in India.

Governing Law Versus Procedural Law

Another important distinction is between the governing law of the contract (which determines rights and obligations) and the procedural law of arbitration (which governs how the arbitration is conducted). Even if the contract is governed by foreign law, if the seat is India then the procedural law will follow Indian law (Part I of the Act). Therefore a careful clause will separate and specify both governing law and seat clearly.

What This Means for Drafting

In a scenario where an Indian company has significant assets in India or anticipates needing interim relief or enforcement in India, choosing a seat in India gives the advantage of access to Indian procedural mechanisms. In contrast, if a neutral international seat is preferred (for example Singapore or London), then the enforcement path in India must be carefully built into the clause for example by stating that any award may be enforced in Indian courts or providing fallback to India if assets are located there. The seat choice should therefore reflect the practical realities of where assets reside, what court assistance may be required, and which procedural law the parties prefer.

SEAT, VENUE, AND GOVERNING LAW: THE THREE CHOICES THAT SHAPE EVERY CROSS-BORDER CONTRACT

Most cross-border disputes don’t start with bad business they start with bad drafting. The difference between a clause that works and one that fails often comes down to three words that many people use interchangeably: seat, venue, and governing law. Each has a precise legal meaning, and confusing them can easily turn an international arbitration into years of procedural litigation.

Why the seat matters so much in the case of arbitration

Choosing the right seat is not a formal detail it affects where procedural issues are decided, whether interim relief is available from Indian courts, and whether a court in India may set aside an award. In cross-border contracting between an Indian entity and a foreign counterparty, the seat decision often determines whether Indian law or foreign procedure governs the dispute resolution process.

Understanding the “Seat” of Arbitration

Think of the seat as the legal home of the arbitration. It determines which courts will have supervisory control and which procedural law will govern the process. In simple terms, the seat decides the nationality of the arbitration.

If the seat is in India, the Arbitration and Conciliation Act, 1996 automatically applies. Indian courts can grant interim measures under Section 9, assist with appointment of arbitrators under Section 11, and even set aside an award under Section 34. This gives the parties the comfort of local oversight.

The Supreme Court clarified this concept in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, commonly known as BALCO. The Court held that arbitration law is territorial in nature, meaning that once parties select a foreign seat, Indian courts cannot apply Part I of the Act. This judgment ended years of confusion where Indian courts had intervened in foreign-seated arbitrations and firmly aligned India with the global principle of “seat-based jurisdiction.”

For example, if a contract says, “The seat of arbitration shall be New Delhi, India,” then the entire arbitration, including any court proceedings, falls within Indian jurisdiction. If it says, “The seat of arbitration shall be London, England,” then English courts and English procedural law govern the process, even if one of the parties is Indian.

What “Venue” Actually Means in an Agreement

The venue is simply the physical place where the arbitration hearings happen. It has no impact on the legal framework unless the contract specifically says that the venue is also the seat. The Supreme Court explained this difference in Union of India v. Hardy Exploration and Production (India) Inc. (2018) 7 SCC 374, observing that merely naming a venue does not make it the seat unless the parties clearly intend it.

For instance, a clause stating “The venue of arbitration shall be Singapore” is not enough to make Singapore the seat. The contract must either say “The seat of arbitration shall be Singapore” or provide language showing that Singapore law will govern the procedure. Otherwise, courts may treat the arbitration as India-seated, leading to jurisdictional uncertainty.

The “Governing Law” of the Contract

The governing law is different from both seat and venue. It governs the commercial terms of the agreement performance, breach, and remedies. This is sometimes called the substantive law of the contract.

For example: “This Agreement shall be governed by and construed in accordance with the laws of India. The seat of arbitration shall be Singapore.”

Here, the contract itself is interpreted under Indian law, but the arbitration procedure follows Singapore law.

The Supreme Court reaffirmed this distinction in Enercon (India) Ltd. v. Enercon GmbH (2014) 5 SCC 1, explaining that the law of the contract (substantive law) and the law of arbitration (procedural law) may be different and must be expressly identified to avoid confusion.

Why Mixing These Up Leads to Litigation

When seat, venue, and governing law are not clearly defined, parties end up arguing about where to arbitrate and which court has authority long before the actual dispute is heard. This defeats the entire purpose of choosing arbitration in the first place.

Some common drafting mistakes include:

·      Using the words seat and venue interchangeably.

·      Naming only a city without specifying its legal significance.

·      Omitting the governing law entirely or making it inconsistent with the rest of the contract.

·      Choosing a foreign seat but relying on Indian court powers that won’t apply.

A 2024 study published in the Cambridge Law Journal by Arzandeh found that nearly 30 percent of the international contracts reviewed contained conflicting or incomplete dispute-resolution clauses. The study emphasised that the best way to avoid enforcement risk is to make the clause self-contained, clear, and aligned with the law of the seat.           

In arbitration, words are law. A single misplaced word like “venue” can determine whether your client fights in London or Mumbai. Once the contract is signed, the clause becomes binding, so any ambiguity can lock parties into years of jurisdictional battles. Taking an extra ten minutes during drafting to clearly identify the seat, venue, and governing law can save months of litigation and ensure that an arbitral award is enforceable both in India and abroad.

HOW INDIAN COURTS HAVE SHAPED ENFORCEABILITY IN TODAYS TIME

The real test of any arbitration clause is not when it is signed but when it is invoked. Indian courts over the last two decades have moved from being interventionist to being far more arbitration-friendly. Several landmark judgments have clarified when Indian law applies, how foreign awards are enforced, and when courts can step in. These cases form the backbone of enforcement strategy for every cross-border contract involving India.

1. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO, 2012)

Before 2012, Indian courts occasionally applied domestic arbitration law even when the arbitration was seated outside India. This caused delays and led foreign investors to see Indian enforcement as unpredictable.

The Supreme Court in BALCO (2012) 9 SCC 552 corrected that. It held that the Arbitration and Conciliation Act, 1996 is territorial in scope. Part I applies only to arbitrations seated in India, while foreign-seated arbitrations are governed solely by Part II.

The Court explained that the seat of arbitration is the centre of gravity for procedural law. Once the seat is chosen, only the courts of that seat have supervisory jurisdiction. Indian courts therefore cannot intervene in the conduct of a foreign-seated arbitration except when asked to enforce the final award.

The BALCO ruling gave clarity to thousands of contracts and made India’s approach consistent with international standards followed in jurisdictions such as Singapore, Hong Kong, and the United Kingdom.

2. Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. (2021)

The next major leap came in 2021, when the Supreme Court had to decide whether an emergency arbitrator’s order issued under institutional rules was enforceable in India.

In Amazon v. Future Retail (2021) 9 SCC 1, the Court upheld the validity of emergency arbitration. It ruled that when the seat of arbitration is in India, an emergency arbitrator appointed under institutional rules (in this case, the Singapore International Arbitration Centre Rules) qualifies as an “arbitral tribunal” for the purpose of Section 17(2) of the Act.

This means an emergency arbitrator’s order can be enforced by Indian courts just like an order of a regular tribunal. The decision placed India among a small group of jurisdictions that recognise emergency arbitration under domestic law.

For businesses, the practical impact was significant: they could now obtain urgent interim relief without waiting months for a tribunal to be formed. This became especially useful in technology, e-commerce, and investment disputes where timing is critical.

3. Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. (2017)

The Supreme Court upheld the validity of a two-tier arbitration clause, where the award of one tribunal could be appealed to another arbitral tribunal.

Hindustan Copper had argued that such a clause violated Indian public policy. The Court disagreed, holding that party autonomy is the foundation of arbitration and that the Act allows parties to structure their process as they wish, provided it does not violate statutory provisions.

This case reinforced that Indian law respects party choice in how arbitration is conducted, including multi-tier systems that are common in complex cross-border contracts.

4. Venture Global Engineering v. Satyam Computer Services Ltd. (2008)

In Venture Global (2008) 4 SCC 190, the Supreme Court examined when enforcement of a foreign award can be refused on the ground of public policy.

The Court ruled that public policy exceptions must be interpreted narrowly and cannot be used to re-examine the merits of the dispute. Enforcement can only be denied if the award violates India’s fundamental legal principles, morality, or the basic notions of justice.

Although this case predates BALCO, it laid the groundwork for the modern understanding that enforcement of foreign awards should be the rule, and refusal the rare exception.

5. National Agricultural Cooperative Marketing Federation of India (NAFED) v. Alimenta S.A. (2020)

The Supreme Court refused to enforce a foreign arbitral award on the ground that the underlying export contract violated Indian export policy.

The Court emphasised that while public policy is a limited ground, it still applies when enforcement would compel a party to perform an act prohibited by Indian law.

The decision clarified that Indian courts will not enforce awards that directly contravene statutory restrictions, particularly in regulated sectors such as exports, defense, or foreign exchange.

6. Kandla Export Corporation v. OCI Corporation (2018)

Kandla Export Corporation v. OCI Corporation (2018) 14 SCC 715 addressed whether parties can appeal enforcement orders under the New York Convention framework.

The Court held that enforcement of foreign awards in India is governed exclusively by Section 50 of the Act. No additional appeal rights exist beyond what is expressly stated in that provision. This ensures speed and finality in the enforcement process.

7. Alcon Electronics Pvt. Ltd. v. Celem S.A. (2017)

Finally, in Alcon Electronics Pvt. Ltd. v. Celem S.A. (2017) 2 SCC 253, the Supreme Court reinforced that foreign judgments and awards should be given full respect by Indian courts under the principle of international comity.

The Court clarified that a foreign award is presumed valid unless proven otherwise and that objections under Section 48 must be strictly limited to procedural defects or proven breaches of natural justice.

What These Cases Mean in General

Together, these judgments form a consistent trend toward pro-enforcement and minimal judicial interference. For lawyers drafting or vetting international contracts involving Indian parties, they translate into clear practical takeaways:

Choose your seat carefully. If the seat is outside India, Indian courts will not intervene until enforcement.

Emergency arbitration is recognised. If the seat is India, interim measures from emergency arbitrators are enforceable. Public policy is a narrow defence. Enforcement can only be refused for serious legal violations, not commercial disagreements. Two-tier or institutional arbitrations are valid. Indian law respects party autonomy in procedure.

Appeal rights are limited. Once a foreign award passes the Section 48 test, it is final and executable as a decree in India. This line of authority has made India one of the more predictable jurisdictions in Asia for enforcement, especially after the 2015 and 2019 amendments that modernised the Act.

CONCLUSION

Cross-border contracts are now part of everyday business for Indian companies. Their success depends less on how detailed they are and more on how clearly they define the governing law, jurisdiction, and dispute-resolution clause.

Indian courts have become consistent and supportive of international contracting. Cases like BALCO and Amazon v. Future Retail show that well-drafted agreements are both respected and enforceable.

In the end, clarity is everything. When contracts are precise and legally sound, they build trust, attract investment and make cross-border business far easier to navigate.

FAQS: CROSS BORDER CONTRACTS IN INDIA

1. What is a cross-border contract?

It’s an agreement between parties based in different countries. Such contracts must comply with the Indian Contract Act, 1872 and, where money or investment is involved, the Foreign Exchange Management Act (FEMA).

2. Are cross-border contracts enforceable in India?

Yes. They are enforceable if valid under Indian law and clearly state the governing law, jurisdiction, and dispute-resolution clause.

3. What clauses are essential?

Every contract should specify the governing law, seat of arbitration or court jurisdiction, and the rules that will apply to dispute resolution.

4. How are foreign judgments and arbitral awards enforced?

Foreign court judgments are enforced under Sections 13 and 14 of the Code of Civil Procedure, 1908, while foreign arbitral awards are enforced under Part II (Sections 44–52) of the Arbitration and Conciliation Act, 1996.

5. Are emergency arbitrator orders enforceable in India?

Yes, when the arbitration is seated in India. The Supreme Court in Amazon v. Future Retail (2021) held that emergency arbitrator awards can be enforced under Section 17(2).

6. When can enforcement be refused?

Enforcement can be denied only if the award violates India’s public policy, lacks due process, or goes beyond the scope of the arbitration agreement.

7. Why does the “seat” of arbitration matter?

The seat determines which country’s law governs the arbitration procedure and which courts can exercise supervisory powers.

8. How can businesses protect themselves in cross-border contracts?

By drafting precisely, selecting a clear seat and governing law, and ensuring compliance with Indian and foreign exchange laws.

ABOUT THE AUTHOR

Aman Patel is a corporate lawyer focusing on company law, commercial agreements, and compliance strategy. He advises on contract drafting, business structuring, and legal due diligence for growing companies. A graduate of Symbiosis Law School, Hyderabad (B.A. LL.B.), he contributes his practical experience to SolvLegal’s legal resources for professionals and businesses.

DISCLAIMER

The information provided in this article is for general educational purposes and does not constitute a legal advice. Readers are encouraged to seek professional counsel before acting on any information herein. SolvLegal and the author disclaim any liability arising from reliance on this content. Connect with SolvLegal on LinkedIn.