INDIA Law and Practice Contributed by: Shivalik Chandan, Hardik Choudhary, Dhruv Singh and Arjun Khurana, G&W Legal
serious hurdles in the enforcement of such a guarantee. Taxation The Indian government has recently increased the quantum of withholding tax payable on roy - alties and fees for technical services of foreign entities by Indian parties, which will be required to be deducted by an Indian licensee from a for - eign licensor of intellectual property. Licensors/ transferors are advised to specify obligations in this regard in any agreement, including appropri - ate tax certificates proving payment. Foreign licensors of intellectual property would be best advised to take advantage of vari - ous double taxation avoidance arrangements (DTAAs) that India has with most other nations. In order to take advantage of DTAAs, the licensor will require a tax residency certificate from its home country, and will need to register with the web portal of the Indian Income Tax Department, and provide a declaration that it does not have a Usually, a party in the stronger bargaining posi - tion (which would generally be the licensor in such agreements) would look to ensure that the laws of its home jurisdiction would be the gov - erning laws of the contract. As such, courts of the home jurisdiction of the licensor would also ordinarily be provided exclusive jurisdiction over adjudicating disputes arising from the licence agreement. However, licensors could face challenges enforc - ing foreign judicial awards, as Indian courts recognise the enforceability of only some for - eign courts. Parties should consider this aspect before determining foreign jurisdiction in any permanent establishment in India. Applicable Law and Jurisdiction
agreements which would potentially require enforcement actions by Indian courts. Addition - ally, licensors would be well advised to retain the power in the agreement to approach courts in the licensee’s jurisdiction to seek injunctive relief. Adjudicating disputes in Indian courts also car - ries several challenges, not least the significant backlog of cases in the Indian judicial system. Resolving disputes in Indian courts may take five to ten years (and possibly even longer). If parties intend to adjudicate disputes through arbitration, care must be taken to ensure that the arbitration is held in a country that is notified as a reciprocating territory by the Indian government and is a signatory to the New York or Geneva For an agreement to be entered as evidence before Indian courts of law, it is necessary that the requisite stamp duty under the Indian Stamp Act, 1899, has been paid. Until such requisite duties have been paid, the agreement may not be validly enforced or placed in evidence before an Indian court, which would then be bound to impound such an agreement and insist that the parties pay the applicable penalties. Licensors need to insist that such obligations are complet - ed by the Indian party from the get-go, and that the licence agreement itself carries a specific obligation in this regard. Competition In many cases, technology transfers are riddled with restrictive covenants, as well as minimum pricing directions upon the licensee. Licensors would be best served seeking specific legal assistance from local counsel on antitrust issues, such as restrictions on owners of the licensees Convention. Stamp Duty
136 CHAMBERS.COM
Powered by FlippingBook