India has been on an unabated growth trajectory - supported by a GDP of nearly US$ 11.5 trillion (S$15.9 trillion), India is also the world’s third largest economy after China and the United States, according to 2019 International Monetary Fund estimates. Rising affluence and growing urbanization in India has attracted investors who are keen to tap on India’s elite and affluent households two of the fastest-growing income segments in the country, expected to double to 16% of the population by 2025. The rapid growth of India has not stopped despite the COVID-19 pandemic. Indeed, the authors continue to observe increasing number of investments in tech-related start-ups in India by foreign venture capital funds and institutional investors and also the shift in supply chains with more companies looking to set up their manufacturing plants and factories in India, even in the last 6 months.
It is therefore not surprising that for two consecutive financial years, Singapore has been the top source of foreign direct investment (“FDI”) into India, accounting for about 30 per cent of FDI inflows in 2019 to 2020.1 In the last financial year, India attracted a staggering US$ 16.23 billion in FDI from Singapore.2 This increase in investments is further buttressed by the support from various tax treaty amendments that Singapore and India have signed in recent years, such as the revised Avoidance of Double Taxation Agreement in late 2016. This has created an environment wellsuited for investments and joint venture partnerships between Singaporean and Indian businesses. This article seeks to focus on joint venture companies as typically, such joint ventures involve the long-term cooperation and synergy of commercial parties, each bringing different but complementary skill sets to the table. For instance, one party (usually the international party) may be equipped with the technical know-how, industry expertise, design thinking, positive branding or funding, while the other party (usually the local party) leverages on its contacts, operations and local commercial acumen (and navigation of Indian politics and complex laws and regulations) to help the joint venture project expand in the local and / or regional market.
However, joint venture projects carry the possibility of dispute arising between partners. Such disputes may be aggravated by the cross-border nature of joint ventures and arise if there are shareholder deadlocks (or parties holding 50:50 shareholdings as a result of equal partnerships) or arise due to the different legal and cultural backgrounds of parties. Whilst parties generally conduct due diligence on the counterparty before entering any agreement, disputes may still arise in the course of their relationship and it is therefore imperative that parties agree on a quick and effective form of dispute resolution in their contracts. In this context, mediation has shown itself to be a powerful tool for bringing a speedy and effective end to such disputes between parties, while preserving the commercial relationship between them.
THE EVOLUTION OF MEDIATION
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