INDIA Law and Practice Contributed by: Neeraj Tuli, Rajat Taimni, Amrit Singh and Anuj Bahukhandi, Tuli & Co
Open AI OpCo LLC , 2026 SCC OnLine Del 5291 is illustrative. Although OpenAI’s servers and the training process were located outside India, the Court found that Indian Courts had territorial jurisdiction, having regard to factors including ANI’s principal place of business in Delhi and OpenAI marketing its services to, and generating responses for users across India, including Delhi. The decision indicates that Courts are unlikely to determine jurisdiction solely by reference to the physi- cal location of the servers or the place where an AI model is trained. Instead, the focus is likely to be on the continuous chain of cause of action, including fac- tors such as the claimant’s registered office or domi- cile, and the location of receipt or usage of data and the users. As AI systems increasingly operate across jurisdictions, this may result in greater reliance on principles concerning the location of the harm, pur- poseful targeting of users and the territorial reach of the applicable substantive law. The question of which jurisdiction’s law applies to particular aspects of an AI-related dispute is, however, likely to remain fact- specific and will depend on the nature of the claim and the jurisdictions involved. 3. Arbitration in Insurance Disputes 3.1 Recognition of Arbitration Clauses Indian Courts generally strictly enforce arbitration clauses. This position also holds true for insurance and reinsurance contracts. The seven-judge bench of the Supreme Court in its landmark decision in the case of In Re Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 , (2024) 6 SCC 1, overruled the earlier five-judge bench decision of NN Global Mercantile Pvt Ltd v Indo Unique Flame Ltd (2023) 7 SCC 1 and held that an unstamped instrument con- taining an arbitration clause is valid and enforceable in law. The Supreme Court has also held that an arbitra- tion agreement is a separate contract, and the invalid- ity of the underlying instrument does not render the arbitration agreement void. On 27 October 2023, the Insurance Regulatory and Development Authority of India (“IRDAI”) issued a cir-
cular directing that all policies issued under the com- mercial lines of business will have a mandatory arbi- tration clause, which stipulates that “the parties to the contract may mutually agree and enter into a separate Arbitration Agreement to settle any and all disputes in relation to this policy”. In case parties mutually agree on an arbitration agreement, then the arbitration pro- ceedings will be conducted as per the provisions of the Arbitration and Conciliation Act, 1996 (“Arbitra- tion Act”). The circular has further deleted arbitration clauses from all policies under the retail lines of busi- ness prospectively. For the existing retail policies, the existing arbitration clause shall remain valid until the term of the policy expires unless a policyholder specifically requests the insurer to replace it with the clause mandated by the IRDAI. This also applies to all existing policies issued under the commercial lines of business. Notably, the Supreme Court in BGM & M - RPL - JMCT ( JV ) v Eastern Coalfields Ltd , 2025 SCC OnLine SC 1471, has recently clarified that a contractual clause which merely provides that disputes “may be” resolved through arbitration does not, by itself, constitute a valid and binding arbitration agreement within the meaning of Section 7 of the Arbitration Act. The Court made it clear that such language is merely enabling and does not bind the parties to arbitrate unless there is a subsequent, express agreement to that effect. Further, a five-judge bench of the Supreme Court in the case of Cox & Kings Ltd v SAP India ( P ) Ltd , (2024) 4 SCC 1, held that non-signatories to an arbitration agreement may be joined as parties to an arbitration proceeding. However, before this, the Court or tribu- nal must determine whether such persons or entities intended to be bound by the arbitration agreement or the underlying contract based on their conduct, rights, or involvement in the formulation, execution, or termination of the contract. In ASF Buildtech Pvt Ltd v Shapoorji Pallonji & Co Pvt Ltd , 2025 SCC OnLine SC 1016, the Court invoked the Group of Companies doctrine to implead a non- signatory with a positive, direct and substantial involvement, recognising that in complex areas such as reinsurance contracts, traditional bilateral arbitra-
152 I NSURANCE L I T IGATI O N 2026
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