Report No. 188

Chapter II

Commercial cases arising in India being taken over by US, UK Courts on ground of 'Forum Non Conveniens'; reasons not acceptable

It has been pointed out in Chapter I that the Commission is of the firm view that there should be a 'Commercial Division' in each High Court to decide high value commercial cases between Indian parties and also between Indian parties and foreign parties for purposes of their speedier disposal on fast-track, with all high-tech facilities. In this Chapter, the Commission is giving an additional reason for recommending the constitution of the 'Commercial Division'. The additional reason is that it is now imperative that we have to negate the recent judgments of US and UK Courts taking up cases which should have been filed in India on the specious reason that, in India, almost all cases take twenty-five years for disposal, a general assumption for which there is, in our view, no real justification.

The Commission, with its overall view of the administration of justice in this country can assert that thousands of cases, particularly those relating to commercial disputes are, in fact, resolved by Indian courts much faster - some within even one year, and many in two or three years, and that therefore, the characterisation of the Indian justice system by the foreign courts as being in a 'deplorable' state or that it has 'collapsed' appear to us to be highly exaggerated.

For example, in a heavy Court like the Delhi High Court, commercial cases involving realization of monies are under Bank Guarantees or Letters of Credit are disposed of in one year or at the most, in two years but yet recently when the question arose before the Supreme Court of New York, New York County in the year 2003, ShinETSU Chemical Co. Ltd vs. ICICI Bank (and State Bank of India), the Court took up the case on the assumption that in India even such cases would go on for fifteen years. That case related to a suit by a Japanese company against Indian Banks on the basis of Letters of Credit (where no cause of action arose, within US). An affidavit of an Indian expert was filed in the US Court stating that there are delays upto fifteen years in Delhi High Court.

The action was filed in New York Commercial Court on the ground that Indian courts take twenty five years for disposal. The only nexus with US was that the Indian Bank had either branch in New York or was trading in the New York stock exchange. We are referring to this instance only to show that the US and UK courts have made rather very unjustifiable and broad generalizations on the basis of affidavit evidence of Indian experts, relying on one or two cases and generalizing that almost all cases take fifteen to twenty years in the Indian Courts. The criminal case concerning bombing of the Kanishka Aircraft of Air India of the year 1985 is still being tried in the Canadian Courts but on that basis we cannot generalize that all criminal cases in Canada take twenty years!