INDIA Law and Practice Contributed by: Neeraj Tuli, Celia Jenkins and Rajat Taimni, Tuli & Co
9.2 Insurance Disputes Over Jurisdiction and Choice of Law Indian courts are increasingly enforcing the choice of law and jurisdiction made by parties in a contract. Par- ty autonomy is respected, except where public inter- est or policy issues are involved. Where an express choice of law and jurisdiction has not been specified in a contract, Indian courts will usually apply conflict- of-law principles to determine the forum and law that are closest to the dispute. Even in the case of arbi- tration, a similar approach has been followed. India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 (the “Geneva Convention”) for the enforcement of foreign awards. 9.3 Litigation Process An insured may, depending on the facts of the case, approach a civil/commercial court or a consumer court. Proceedings before the consumer courts are summary in nature. This means that typically no cross-examination of witnesses takes place and the dispute is adjudicated based on the documents filed and arguments led by the parties. The broad ascending hierarchy of the civil courts is similar to that of the consumer courts. It comprises 688 district courts, 25 High Courts, and the Supreme Court of India (the highest court in India). Out of the 25 High Courts, five High Courts – namely, the High Courts of Calcutta, Madras, Bombay, Delhi and Himachal Pradesh – have original jurisdiction, which means that matters exceeding particular pecuniary thresholds will be heard by the High Court in the first instance. For some of these five High Courts, there are territorial limits within which the cause of action must arise for it to be heard by the High Court at the first instance. Trials before the civil courts follow the usual process of pleadings, evidence and arguments as in other common-law jurisdictions. As such, they can take an unusually long time to conclude.
generation generally. The Supreme Court of India has held that the relevant consideration in determining if an insured is a “consumer” is whether the items sold, or services offered, are directly related to the activity that generates profit for the insured. In another land- mark judgment, the Supreme Court of India held that an insured cannot make a profit from an insurance policy and – once an insured has been paid by one insurer – it cannot claim the same loss from another insurer. Disputes before civil/commercial courts Insureds can also file a commercial suit against an insurer for enforcing their claims. The Commercial Courts Act 2015 (the “CCA 2015”) recognises insur- ance disputes exceeding a value of approximately INR300,000 (approximately USD3,600) as commer- cial disputes and provides for a fast-track procedure for adjudicating disputes. The Supreme Court in Patil Automation (P) Ltd v Rakheja Engineers (P) Ltd (2022 INSC 841) has clarified that it is mandatory for par- ties to undergo mediation before filing a commercial suit, unless urgent interim relief is sought. The urgent interim relief sought must be genuine and bona fide and not a mere attempt to wriggle out of mediation. Coverage, Limitation Periods and Beneficiaries Disputes pertaining to coverage are rarely arbitrated. Insurance policies generally provide for arbitration in the case of quantum disputes only and coverage dis- putes are usually excluded. The exception to such exclusions may, in certain cases, be liability policies. The limitation period for making an insurance claim before a consumer court is two years. For commer- cial suits and arbitration, the limitation period is three years from the date of rejection of the claim by an insurer or from the date on which the claim arose, whichever is applicable. Unnamed beneficiaries or third parties cannot enforce rights under a general insurance contract. Typically, general insurance contracts have clauses that prohibit the assignment of rights under an insurance contract to a third party without the consent of the insurer.
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