Strategic Arbitration of IP Disputes in Singapore–India Transactions

The relevance of Intellectual Property (IP) has grown significantly in the technologically and commercially advanced economy. As businesses expand globally, IP disputes in international commercial transactions have become more common. Singaporean companies engaged in India often find themselves navigating complex challenges around licensing, technology transfers, distribution agreements, and IP exploitation.

While traditional litigation remains a recognised path for resolving IP disputes, arbitration is now increasingly being preferred for adjudicating IP disputes. Arbitration has emerged as a cost-effective, efficient, and flexible method for resolving cross-border IP disputes.

Arbitration in IP Disputes

Conventionally, arbitration was not perceived as suitable for IP disputes, as  IP rights were seen as statutory rights granted within a territorial jurisdiction. Consequently, the arbitrability of IP disputes has been subjected to judicial interpretation in various jurisdictions. However, the World Intellectual Property Organisation (WIPO) paved the way for the arbitrability of IP disputes through its Arbitration and Mediation Center in 1994.

Arbitration is time-efficient, cost-effective, and flexible, making it a preferred dispute resolution mechanism. Moreover, parties have autonomy in choosing the expert arbitrator and the procedural aspects. Arbitration proceedings maintain confidentiality, serving as a safeguard to the interests of the businesses from public disclosure. As a neutral forum, it avoids the risk of ‘home-court advantage’ in cross-border IP disputes. With the New York Convention, the enforceability of arbitral awards made it a stronger and reliable Alternative Dispute Resolution (ADR) mechanism. Thus, arbitration has gained wide acceptance as a globally suitable dispute resolution mechanism for IP disputes.

Arbitration of IP disputes in India

Arbitration in India is governed by the Arbitration and Conciliation Act, 1996, which is based on the UNCITRAL Model Law and the New York Convention. The act governs both the domestic and the international commercial arbitration. The act aims to provide autonomy to the parties with minimal court interference and provides enforceability of foreign arbitral awards.

The arbitrability of IP disputes has been subjected to judicial debate in India. In Booz Allen v. SBI Home Finance, the Supreme Court laid down the principles of arbitrability, deciding only the ‘rights in personam’ as arbitrable, and ‘rights in rem’ were non-arbitrable. However, this changed with subsequent rulings. In Eros International Media Limited v. Telemax Links India Pvt. Ltd., the Bombay High Court held that infringement and passing off actions were right in personam and therefore arbitrable. Subsequent cases varied based on each case and the nature of the dispute.

Nevertheless, the settled principle is that IP disputes arising from commercial agreements such as licensing, royalties, technology transfer, and joint ventures are arbitrable. However, the questions of validity or grant of IP rights are outside the scope of arbitration, as they involve determination by statute and affect the public domain.

Strategic Considerations

Singapore is an arbitration-friendly jurisdiction, with a modern legal framework governed by the Singapore International Arbitration Center (SIAC) and the International Arbitration Act (IAA), while arbitration in India is still evolving to the increasing needs in the globalised world.  Several Singaporean companies enter into cross-border commercial agreements with Indian entities, making dispute resolution a crucial point of consideration.

The following strategic issues must be considered by the parties:

• Choice of Seat and the Governing Law
  • Choosing Singapore as a seat for arbitration provides neutrality, given its reputation as an international dispute resolution hub. With institutions like SIAC, Singapore has been recognised as a pro-arbitration jurisdiction providing cost-efficient and effective awards. Alternatively, India is increasingly presenting itself as an arbitration-friendly jurisdiction. But the companies must consider the risk of judicial intervention.
  • The parties should also specify the governing law of the contract, whether Indian or Singapore law, in dealing with commercial activities involving IP disputes.
• Scope of the Arbitration Clauses
  • The parties have to consider the scope of the arbitration clauses. Especially in IP disputes, parties must distinguish between contractual disputes and statutory issues, as the validity or grant of IP rights is not arbitrable. The dispute resolution clauses must include licensing, royalties, confidentiality, and technology transfer disputes.
  • The parties can also incorporate emergency arbitration provisions and interim relief. As SIAC rules provide emergency arbitrator provisions, parties can consider them in the contract to resolve IP disputes where urgent actions are required.
• Institutions or the Forum
  • The Stakeholders are at liberty to choose the forum for arbitration. Opting institutions like SIAC, ICC, or WIPO can provide procedural certainty and access to experienced arbitrators. While ad hoc arbitration can be less predictable and tedious.
• Enforcement of Awards
  • Both India and Singapore are signatories to the New York Convention, which enables the enforceability of arbitral awards across jurisdictions. Over 170 states are part of the New York Convention, providing finality and enforceability to the decisions made by the arbitrators. Therefore, the awards made in one jurisdiction are enforceable in other jurisdictions, giving the business a high degree of certainty.

Conclusion

For the Singapore entities engaging in business in the Indian market, arbitration is an optimal pathway to balance cost-efficiency, legal certainty, efficiency, and confidentiality in cross-border IP disputes. While the arbitrability of IP disputes remains, a question decided on a case-by-case basis, it is certain that IP disputes arising out of commercial agreements are well-suited for arbitration. In essence, arbitration is a dispute resolution mechanism aimed at preserving business relationships in Singapore-India IP transactions while providing finality and enforceability to the awards.

• Sanjay Sethiya is the Founding Partner at Law Square, Advocates & Solicitors.
• Kandukuri Lakshmi Priya is an intern at Law Square and a 4th year student, Alliance University, Bangalore.