When Peter Douglass developed a trade show in Delhi for a small company based in Minnesota, he expected the project would face setbacks. And it did--everything from corrupt customs agents to last-minute scheduling nightmares. He didn't expect the Indian joint-venture partner would walk off with the proceeds after the event.
"They said conditions changed, and [they] wouldn't honor the agreement," says Douglass, now president of Intersection Marketing Services in St. Cloud, Minn. "Our contract included an arbitration clause, but it said disputes would be heard in Delhi. So we could either spend untold thousands of dollars on arbitration in India or write it off to life experience."
Such an approach might work for some patent infringement cases, for example, or other types of cease-and desist orders.
But for common issues in contract law, alternative dispute resolution (ADR) offers the only rational solution for companies to protect their legal rights in India.
"If you plan to be in the market long term, do lots of due diligence on partners, vendors and potential customers and markets," Douglass says. "Most people have good intentions, but there's a difference between good intentions and following through on obligations."
The 1996 Arbitration & Conciliation Ordinance strengthened arbitration systems in India, but recent Indian Supreme Court actions have weakened arbitrators and awards--even for disputes heard offshore.