I would like to set down the principles which emerge upon a reading of the judgments cited by the counsel.
11.1. First, parties cannot confer jurisdiction on a court to which CPC applies if it otherwise does not arise in law. However, if in law, two or more courts have jurisdiction in respect of disputes arising between the parties, parties by an agreement can confine jurisdiction qua disputes arising between them to one court and, thus, in effect, put fetters on approaching a court other than the agreed court i.e. the designated court or courts located in a particular territory. Such an agreement is not contrary to public policy, or in restraint of legal proceedings in terms of the provisions of Sections 23 and 28 of the Contracts Act. [See: AVM Sales Corporation1]
11.2. Second, merely because terms such as 'exclusive', 'alone' or 'only' are not used, would have no bearing on concluding as to whether or not the jurisdiction clause obtaining in a contract entered into between the parties confers jurisdiction upon a court to the exclusion of all other courts if the words used in the contract are otherwise clear and unambiguous. The important facet being that the court which is conferred with jurisdiction should, otherwise, in law, have jurisdiction in the matter.
11.3. Third, the parties can, in law, forge or cobble up contracts which have a clause that requires one of the two disputants to approach the courts located in a particular jurisdiction [designated court] even while granting leeway to the other disputant to approach, for agitation of its grievance, not only the designated court but other courts of competent jurisdiction as well. [See: Mauritius Commercial Bank2]
11.4. Fourth, in an international contract, parties often confer jurisdiction on foreign courts located in neutral venues which have nothing to do either with the parties or the contract obtaining between them. [See: Modi Entertainment3]
11.5. Fifth, the courts have jurisdiction to grant anti-suit injunction where it is found that the proceeding that the defendant has taken out or intends to take out is vexatious or oppressive. [However, as would be noticed from the facts narrated hereinabove, that is not the precise frame of the instant suit.] It is, however, submitted on behalf of the plaintiff that if the instant application is allowed, the fact that the plaintiff would then have to approach, perhaps, the Danish courts, would be both vexatious and oppressive.] [See: Modi Entertainment]
11.6. Sixth, the clause concerning governing law would, ordinarily, have no bearing on concluding as to whether or not a clause obtaining in the contract entered into between the parties confers exclusive jurisdiction on a particular court where suits are instituted in India based on the provisions of CPC concerning cause of action. [See: Laxman Prasad4 and Metal Distributors (UK)]
Applicability of the principles:-
18.4 The foregoing shall not, however, preclude B&O from obtaining interim injunctive relief on an immediate basis from a court of competent jurisdiction, pending the initiation, or outcome, of the legal proceedings regarding an alleged breach of confidentiality obligations or infringement of intellectual property rights."
13.1. A perusal of the aforesaid extract would show that Clause 18.1 of the MDA is, in effect, the governing law clause. In terms of the principles articulated hereinabove, this clause, in my view, can have no bearing on the decision as to whether or not Clause 18.2 requires the plaintiff to approach the Danish court in the event it decides to sue the defendant.
13.2. This is for the reason that even if I were to agree with the submission of Mr. Mehta that Indian court has jurisdiction in the cause, it would, then, easily apply the Danish law subject to proof as per the provisions of The Indian Evidence Act, 1872 as to what is the position in the Danish law qua the issue at hand. As to what is the foreign law vis-a-vis the issue arising between disputants is a question of fact which, then, would have to be proved, inter alia, by reference to expert testimony. [See: Hari Shanker Jain vs. Sonia Gandhi, MANU/SC/0551/2001 : (2001) 8 SCC 2335]
13.3. However, when Clauses 18.2, 18.3 and 18.4 are read together, what emerges is this, in plain words: In the event, the plaintiff seeks to agitate any controversy arising out of the MDA, it will have to approach the venue where the defendant is located i.e. Denmark, in other words, the Danish courts.
13.4. This is evident from the fact that while Clause 18.2 says that the parties agree that any controversy arising under this agreement [i.e. the MDA] shall be presented before the court located at the defendant's venue [and that parties hereby submit themselves to the jurisdiction of the said court], the next clause i.e. 18.3 explicitly states that "notwithstanding the aforesaid, the defendant may elect to take legal action against the Master Dealer at the Master Dealer's venue" i.e. the Indian courts.
13.5. Likewise, Clause 18.4, in no uncertain terms, states that the foregoing i.e. clauses 18.1, 18.2 and 18.3 shall not preclude the defendant from obtaining interim injunctive relief, on an urgent basis, concerning matters involving breach of confidentiality or infringement of intellectual property rights from a court of competent jurisdiction pending initiation or outcome of legal proceedings.
14. Thus, what comes forth, is that, while the plaintiff can be sued by the defendant both in Danish courts and in Indian courts, the plaintiff can sue the defendant only in Danish courts. Concededly, both the Danish courts and Indian courts have jurisdiction and, therefore, it cannot be said, in this case, that parties have foisted jurisdiction on one or the other courts where none, in law, arises. Admittedly, a part of the cause of action has arisen in Denmark.
14.1. The defendant is, admittedly, situated in Denmark. Therefore, the parties could agree on confining the jurisdiction concerning disputes arising out of the MDA in the Danish courts even while giving leeway to one of the disputants i.e. the defendant to approach courts in India as well Danish Courts for agitating its grievance.
14.2. The logic and rationale of giving the defendant the leeway to approach Indian courts is obviously for the reason that the plaintiff's assets would be located in India and the goods which the defendant was required to supply under the MDA would possibly be sold in stores/shops located in India. The defendant, therefore, perhaps, required such play in the joints to ensure that the remedy available to it is efficacious.
14.3. Clauses 18.3 and 18.4 envisage a situation which is often captured in international contracts that enables a foreign party [in this case, a foreign supplier] to approach courts of competent jurisdiction [i.e. in this case, the Indian courts] for securing its interest having regard to the fact that the assets of the opposite party are often located in jurisdictions other than where the foreign party is situated.
14.4. These are, to my mind, clauses which provide, in a manner of speech, two strings to a bow to one of the parties [in this case, the defendant]. It is no one's case and none has been pleaded that the plaintiff was coerced into executing the MDA, in particular, concerning the provisions of Clause 18 of the MDA.
14.5. The fact that no grievance qua the same was made in the first 5 years only fortifies my view. These clauses, in my opinion, are neither against the public policy of India nor can be construed as clauses which fetter the plaintiff from taking recourse to a legal proceeding.
Ratio: the Court held that the law permitted the parties to an international contract to confer jurisdiction on foreign courts located in neutral venues which did not have any nexus either with the parties or the contract between them, and that as an extension of this autonomy the parties could further contract between themselves to require one of them to approach only the courts located in a particular jurisdiction in the case of dispute, even while granting leeway to the counter-party to approach not only the said identified court but other courts of competent jurisdiction as well.
IN THE HIGH COURT OF DELHI
I.A. No. 4174/2020 in CS (COMM) 122/2020
Decided On: 24.08.2020
Beoworld Pvt. Ltd. Vs. Bang & Olufsen Expansion
Hon'ble Judges/Coram:
Rajiv Shakdher, J.
Citation: MANU/DE/1593/2020
Print Page