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shonith (Law Officer)     28 July 2009

Agreement and Jurisdicton

Dear All,

If  there is a clause in an agreement enteredinto between two Indian companies, as stated below, whether Law of  the State of New York, USA will govern that agreement and whether that clause will confer jurisdiction to courts of State of New York, USA?

 

"

This letter agreement shall be construed in accordance with the law of the State of New York, USA other than its conflict of law rules."""

Thanks and Regards

Shonith P.S.



 3 Replies

VIKAS WALIA (LAW OFFICER )     28 July 2009

Dear Shonith, In case, a governing law/ jurisdiction of foreign land were sought to be invoked in a particular agreement through express covenant, then in such case , in the event of any dispute, the same has to be settled as per the such governing law referred in the agreement. Although, generally the governing law and jurisdiction of court are separately defined in any agreement, however, in the present matter in hand, the situation seems to be otherwise. However, in the absence of any express provision as to jurisdiction, both the parties may mutually agree for the same, however in case of a deadlock to reach at a consensus regarding place of jurisdiction, the issue shall have to be decided as per the governing law referred to in the agreement. Thus in the present matter also, although, the courts at New York have not been expressly conferred the jurisdiction to resolve the dispute, however, in the absence of any subsequent consensus between the parties, the issue may be settled as per the laws prevalent in New York, USA. Besides, since both the parties also belongs to India, therefore, by virtue of this fact alone, the jurisdiction of Indian courts can also be invoked, to avoid the deadlock between the parties.

shonith (Law Officer)     29 July 2009

Dear Sir,

Thanks a lot for the prompt reply.

As the clause states that " This letter agreement shall be construed in accordance with the law of the State of New York, USA other than its conflict of law rules.""" , here the words "shall be construed" is only seen, there is no refrence regarding the Governing law and jurisdiction in the said clause and in the said agreement.

As there is no other caluse in the said agreemnt regarding the GOverning law and jurisdiction

Whether this clause will  make the same Newyork law the goverinig law and confer

jurisdiction to newyork courts by default?

Wheher "shall be construed" can be taken as "shall be governed" ?

Is it rue that this "shall be construed in accordance with the law of the State of New York, USA"

will come into scene when there is any necessity regarding the interpretation of any calsue in

the said agreemnt.

Thanks and regards

SHONITH

Anup Kumar (business)     29 July 2009

In my view Governing Law shall of New York.    "shall be construed........"  means shall be interpretted. Also, in my view Courts of New York shall have Jurisdiction because if law of USA has to be applied it can be applied by Courts situated therein.


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