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It is not every week that the issue of dispute resolution in India grabs the attention of Israelis, but last week certainly was such a week.
Sarine Technologies Ltd, which is traded on the Tel Aviv Stock Exchange (and in Singapore) announced that an Indian court had ruled in its favor and against the illegal use of its software and actually issued an injunction against five entities in India that had been engaged in acts of infringement. The announcement went on to report that the Indian court further ordered the immediate removal of the infringing software from the infringing parties’ computers.
Just a few days later, news reports out of India indicated that, in connection with the long-standing dispute between Reliance Retail and Amazon, the Indian Supreme Court had some very harsh words for the government concerning the delays in the composition of a three-member international arbitral tribunal. (We wrote about that dispute two years ago, https://www.sherby.co.il/blog/2020/11/09/emergency-arbitration-a-lesson-from-india/ )
According to one news report, one judge of the Indian Supreme Court prefaced his remarks with the phrase “Heavens will fall,” as he proceeded to state:
“On the one hand, we [India] are crying hoarse that we want to encourage foreign investment, encourage business. And is this the kind of business friendly environment that you want to create? A three member international arbitration tribunal is waiting.”
It is not commonplace for an Israeli company to win a lawsuit in a foreign country – much less be awarded injunctive relief against five businesses based in that foreign country. At the same time, it is not commonplace for the Supreme Court of a country to chide its own judicial system for foot dragging in the constitution of an arbitral panel.
Both of these stories contain lessons for Israeli companies involved in international commerce — whether in India or some other country.
In the case of Sarine Technologies, without our having any inside information, it is reasonable to assume that the decision by Sarine to invest in a lawsuit in a country wherein the company had little or no prior litigation experience resulted from a recognition that the failure to act aggressively against infringing parties would be interpreted by those parties (and possibly by other infringers) as an abandonment of the company’s intellectual property. For many companies in such a situation, this kind of litigation is often thought of as a “bet your company” case.
Needless to say, in the overwhelming majority of copyright infringement disputes, there is neither an arbitration clause nor a forum selection clause that dictates the forum for resolution of a dispute. In other words, in such cases, a company that believes that its intellectual property rights have been infringed has no choice but to commence legal proceedings in the court of the home country of the infringing party.
Put slightly differently, in many situations, the “bet your company” case has to be filed in a forum that is very inconvenient to the aggrieved party.
The success story of Sarine does not mean that a foreign “bet your company” case is going to be successful. Although in India the issue of a language barrier was not much of a concern, Sarine undoubtedly knew that the judicial system in India is not known for speed, and there have been mixed reports regarding the extent to which non-Indian companies feel that they get a fair hearing.
In the case of Sarine, it is likely that the Israeli plaintiff benefited from an advantage that most Israeli companies do not have – namely, its General Counsel, William Weisel, happens to have extensive experience supervising litigation remotely. We venture to guess that few, if any, Israeli companies have in-house counsel with greater experience in the remote supervision of foreign counsel than Adv. Weisel.
Experience in working remotely with foreign litigation counsel is helpful in any complex dispute, but it is even more important when decisions have to be made on a daily (sometimes hourly) basis – such as when injunctive relief is sought.
The words of the judge of the Indian Supreme Court do not require much elaboration. For decades the Indian judicial system has been perceived as slow. Arbitration is supposed to be faster than litigation in court. Therefore – and as aptly observed by the Supreme Court judge – if arbitration in India is perceived as not being faster than litigation in India, then non-Indian companies are likely both to (a) hesitate to do business with Indian companies, and (b) hesitate to agree to dispute resolution (whether in court or in arbitration) in India.
So, for Israeli companies that are worried about intellectual property infringement abroad, the case of Sarine provides some comfort that litigation in a country with which the Israeli company may not have experience can still be a worthwhile venture. At the same time, the above-quoted scolding of the Indian legal system is a reminder to non-Indian companies that any form of dispute resolution that is based in India needs to be approached carefully.