In a recent judgment, the Supreme Court of India has held that the parties to a contract can agree to submit to the exclusive or non-exclusive jurisdiction of a foreign “neutral” court, i.e., a court in a country to which none of the parties or the transaction under the agreement is in any way connected. The court clarified that such contracts are an exception to the well settled principle under section 20 of India’s Code of Civil Procedure, 1908 (“CPC”), which stipulates that parties cannot by agreement confer jurisdiction upon a court, to which the CPC applies, if such court does not have jurisdiction otherwise. (Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd., 2003 AIR SCW 733)
While deciding the case, the Supreme Court considered two issues. The first issue was whether the parties to a contract can agree to have their disputes resolved by a foreign court (either a “neutral court” or a “court of choice”) by creating exclusive or non-exclusive jurisdiction on such court. The second one was whether the Indian party to a contract can seek an anti-suit injunction from an Indian court against the proceedings in a foreign court (the forum of choice agreed under the contract) on the ground that the Indian court has natural jurisdiction over the subject matter.
After detailed consideration, the Supreme Court held that while contracting with an Indian party, the foreign parties to the contract may choose to submit to the exclusive or non-exclusive jurisdiction of a foreign court, notwithstanding that none of the parties or the transaction under the agreement is not connected with such foreign court.