India Business Law Journal –  December 2009/January 2010

Will green shoots take root?

For many, 2009 will be remembered as the year the world spent trying to get back on its feet

But in India, somewhat shielded from the effects of the annus horribilis, 2009 will be remembered as the year the Congress Party sprang a surprise at the general election, Indian scientists reached out to the moon and the country’s cricketers emerged as the kings of Test cricket. On the business front, 2009 also saw noteworthy developments, albeit less glitzy than those during the highs of the decade.

Our Cover story showcases 18 of the year’s top finance, capital markets and M&A transactions, as well as some of its most significant court cases (Deals of the year). In so doing we celebrate the innovation and practical expertise of the lawyers and law firms that guided the deals to fruition amid challenging circumstances. A large number of this year’s winning deals were handled solely by domestic firms. Notably only one UK magic circle firm was involved in any of them. “Our experience of high-value and complex international transactions has led clients to trust us as primary legal counsel on substantial deals,” says Rabindra Jhujhunwala, a partner at Khaitan & Co. Other observers feel the trend is symptomatic of the economic malaise in the West. With the spending power of international corporations and financial institutions severely reined in by the financial crisis, many of this year’s winning deals were wholly domestic affairs.

One of India Business Law Journal’s finance Deals of the Year was the US$5.54 billion investment in Indian Oil Corporation’s Paradip refinery project. As highlighted in our coverage, this was a wholly deshi deal, with both the bankers and lawyers involved being from India. Two more power projects make it onto our list of winning finance deals – the Sasan ultra mega power project and the fourth phase of the Mundra thermal power project. Deals such as these, happening as they are in the early days of economic recovery, are particularly significant given the government’s commitment to providing power for all by 2012.

What of 2010? Will the green shoots of recovery take root? In this issue’s Vantage point (India in 2010) senior business and legal professionals gaze into their crystal balls and predict the future. While all of them are upbeat about the year ahead, some offer poignant words of caution.

David Jacobs, head of India at Baker & McKenzie, believes that the continued development and growth of the country depends in part on the opening up of its legal sector. However, Lalit Bhasin, the president of the Society of Indian Law Firms, warns that “the government is not currently contemplating any change in policy to allow the entry of foreign law firms.”

So 2010, it seems, will see business as usual in the rumbling debate, between lawyers in India and those who watch impatiently from the ringside, over the entry of foreign law firms.

Business as usual is also a near certainty for India’s overburdened courts and those who rely on them to dispense justice. The first of this issue’s Spotlight features (Shopping for justice) throws light on the much-maligned practice of “forum shopping”. While the wise choice of venue for the resolution of any dispute is crucial, a fine line divides the principle of “plantiff’s choice” from the unethical practice of deliberately choosing a forum (or forums) that is likely to place the opponent at an unfair disadvantage. “The practice of forum shopping perceptibly goes against the very object of ‘equality before law’,” says Himanshu Chahar, an associate at LexCounsel. But while the practice is widely condemned by judges, it continues to flourish, driven in part by lingering disparities between India’s courts in terms of the speed and quality of their judgments, the size of awards they grant and their access to specialist expertise.

In our second Spotlight feature, Kyle Wombolt of Goodwin Procter investigates the implications of the US Foreign Corrupt Practices Act (FCPA) for businesses in India (Turning a blind eye). Wombolt reveals that common misconceptions over the reach and application of the act are leaving many companies vulnerable to the imposition of hefty fines. Given the spate of high-profile cases that has thrust this often-ignored statute into the international limelight, our coverage is timely and essential reading for Indian and international businesses alike.

Another article that merits careful reading is this issue’s What’s the deal? (Sting in the tail). In it we tell the tale of a rather surprising interpretation of India’s takeover code by the Securities Appellate Tribunal and its potentially costly implications for Japanese pharmaceutical company Daiichi Sankyo. The development, which could significantly affect future indirect acquisitions in India, offers a powerful lesson in how seemingly small details can develop into complex and protracted legal disputes.

Getting every detail right is clearly what is on the minds of large Delhi and Mumbai-based law firms as they rush to set up shop in the south of the country (Casting a wider net). Until recently India’s ‘national’ law firms had largely neglected the south, but change is beckoning as even smaller southern cities like Coimbatore and Kochi witness a surge of investment in manufacturing, IT and real estate. Cracking the local market requires specialist local knowledge and cultural sensitivity. As Abhijit Joshi, a partner at AZB & Partners remarks, “the head honcho needs to be a local figure”. Will that be enough for the powerhouses of the north to compete with the local specialists of the south?

As we celebrate the dawn of a new decade, success will clearly lie with the law firms that get this right.