PIRAMAL HEALTHCARE LIMITED (FORMERLY KNOWN AS NICHOLAS PIRAMAL INDIA LTD.) V. DIASORIN CS(OS) NO. 275/2010. MANU/DE/2099/2010
FACT
- A distributorship agreement between an Indian plaintiff and an Italian defendant included an exclusive jurisdiction clause for Italian courts.
- The agreement was terminated by the defendant, leading to a dispute. The agreement pertained to the supply of diagnostic products within the territory of India.
- The plaintiff sought to challenge the termination and the jurisdiction clause in Indian courts.
ISSUE
- Can the Indian court entertain and try the suit despite the exclusive jurisdiction clause favouring Italian courts?
RULE
- The court emphasized honouring contractual jurisdiction clauses unless compelling reasons exist to do otherwise, considering foreseeability and the specific facts of the case.
HELD
- If a contract explicitly includes a jurisdiction clause (exclusive or non-exclusive), parties are generally bound by it. However, Different considerations apply when there's no written contract.
- Contracts designating foreign courts (even neutral ones) for jurisdiction are valid unless they eliminate court recourse entirely.
- The Civil Procedure Code (CPC) guides whether an action is validly instituted in India, but courts have the discretion to enforce jurisdiction clauses.
- Parties cannot confer jurisdiction on an Indian court if the CPC does not support it. This limitation does not apply to foreign courts.
- When parties choose a foreign court, foreseeable circumstances at the time of contract formation should not compel an Indian court to retain jurisdiction.
- The plaintiff's agreement with the defendant, an Italian company, included jurisdiction and governing law clauses favouring Italian courts.
- The defendant had no assets or office in India, and a part of the cause of action arose in Italy.
- Arguments for jurisdiction in India (e.g., the inconvenience of litigating in Italy) were foreseeable and insufficient to override the jurisdiction clause.
- The court cited Modi Entertainment Network and British Aerospace Plc v. Dee Howard Co. to reinforce that foreseeability of factors like litigation expenses and inconvenience do not justify ignoring jurisdiction clauses.
- The court decided not to entertain the suit in India, emphasizing the parties’ agreement to litigate in Italy.
- The plaint was returned to the plaintiff to file in the appropriate court.