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DSK Legal Receives Regulatory Approvals to Open Offices in Abu Dhabi and Dubai, Strengthening the India–UAE Legal Corridor DSK Legal, one of India’s leading full-service law firms, has secured regulatory approvals to establish offices in Dubai, and ADGM in Abu Dhabi, marking a significant step in the firm’s strategic international expansion and its commitment to serving clients across the India–UAE business corridor, as also in the MENA region. With these new offices, DSK Legal aims to support Indian clients with operations in the MENA region, as well as international clients looking to enter or enhance their presence in the Indian market. The firm will offer integrated legal solutions across key sectors, including for projects, real estate, technology, energy, financial services, sports, media, and representing clients in international arbitrations. “We are very excited with these developments. There has been a clear and growing interest from our clients and other Indian businesses to establish or expand their footprint in the UAE across several sectors” said Anand Desai, Managing Partner, DSK Legal. “With the establishment of our offices in Abu Dhabi and Dubai, we are well-positioned to support Indian companies with operations in the UAE, as well as foreign clients with interests in India. We envision a robust and seamless India–UAE corridor, with DSK Legal as a trusted advisor on both sides.” This move comes at a time when India and the UAE are deepening bilateral ties across trade, investment, and strategic cooperation. DSK Legal’s on-ground presence in the region will enhance its ability to advise clients on cross-border matters, including the legal aspects of market entry strategies, leveraging the firm's strong track record and range of ranked practices. Vinodh Kumar, who has been based in the United Arab Emirates for nearly two decades, will be DSK Legal’s resident partner in the UAE. With extensive experience as a General Counsel, Vinodh has successfully led and managed legal teams for major conglomerates operating across Middle East and Africa. His deep regional knowledge and expertise make him a valuable addition to DSK Legal. Justice Ali Mohammad Magrey, former Chief Justice of the Jammu & Kashmir and Ladakh High Court, having very wide experience as a practitioner, Judge and Arbitrator, will be senior advisor for the firm’s UAE offices.    The UAE offices will work closely with the firm’s offices in India to provide clients with cohesive legal support. With this expansion, DSK Legal becomes one of the few Indian law firms to establish a direct presence in both Abu Dhabi Global Market (ADGM) and in Dubai—two leading global financial and legal hubs. About DSK Legal: DSK Legal was set up in 2001 and has since established an excellent reputation for its integrity and value-based, proactive, pragmatic and innovative legal advice and its ability to help clients effectively traverse the complex legal and regulatory regime in India. With offices in Mumbai, Delhi, Bengaluru and Pune, DSK Legal has grown rapidly on the strength of its expertise to a multi-disciplinary team with over 300 professionals, including 60 partners and associate partners, as well as experienced consultants.

Samir Malik*, M. Shahan Ulla**, Aryan Mehta*** Introduction On 27th September 2024, India and Uzbekistan signed a Bilateral Investment Treaty (“the Uzbekistan BIT”) in Tashkent to bolster investment relations and create a more robust and resilient investment environment. This BIT has been in force since 15th May 2025, a culmination of trade relations that extend beyond bilateral trade and investments to defence and security cooperation, science and technology cooperation, education, and cultural cooperation. An interesting aspect of the Uzbekistan BIT is the inclusion of provisions for counterclaims, a rare occurrence globally, much less in Indian BITs. This paper analyses the  Uzbekistan BIT, conducting a comparative analysis of material deviations from the Model BIT as well as more recent BITs signed by India which are in force. The paper first lays down the context of India-Uzbekistan investment relations, then moves to scrutinizing the Uzbekistan BIT, before finally discussing the provision for counterclaims, both in theory as well as the way they appear in the Uzbekistan BIT. Background of India-Uzbekistan Investment Relations India and Uzbekistan share a longstanding historical connection, with ties that trace back to ancient times. Following Uzbekistan’s independence, India was among the first nations to acknowledge its state sovereignty. Diplomatic relations were formally established with the signing of a protocol in Tashkent on 18 March 1992. The bilateral relationship was elevated to a Strategic Partnership in 2011, paving the way for a structured framework of dialogue at both political and official levels to facilitate regular engagement and monitor ongoing areas of cooperation. In the realm of trade, India ranks among Uzbekistan’s top ten trading partners, with bilateral trade amounting to USD 756.60 million. India primarily exports pharmaceutical products, mechanical equipment, vehicle parts, services, frozen buffalo meat, optical instruments, and mobile phones to Uzbekistan. Conversely, India’s imports from Uzbekistan include fruit and vegetable products, services, fertilizers, juice products and extracts, and lubricants. In a move to deepen economic engagement, both countries signed a Joint Statement in September 2019 to initiate a joint feasibility study aimed at launching negotiations for a Preferential Trade Agreement (PTA). Additionally, a Bilateral Investment Treaty has been fully negotiated and is ready for signature. The next stride forward in buttressing these relations is the BIT signed amongst the nations, which is the first investment treaty signed between the two nations. The BIT aims to provide appropriate protection to investors from both nations by boosting investor confidence through a minimum standard of treatment and non-discrimination, while providing for an independent forum for dispute settlement through arbitration. 2024 BIT The Uzbekistan BIT is a culmination of continuous and improving bilateral relations. However, it must be placed in context of India’s variable approach to BITs. To better understand India’s approach, this section scrutinizes the BIT in context of India’s 2015 Model BIT (“Model BIT”) and the BITs signed by India since the publication of the Model BIT, particularly the new India-UAE BIT of 2024 (“UAE BIT”) which marked various deviations from the Model BIT. Retracing Steps Towards the Model BIT Despite significant existing investment relations, the Uzbekistan BIT provides protection only prospectively, from the date of entry into force (Art. 2.1). Although this is in line with common practice, India has previously made an exception for UAE where the UAE BIT upgraded the protection of those investments made before the BIT’s entry into force (Art. 2.1). This is exacerbated by the fact that UAE was allowed this benefit despite an existing BIT, yet the investments with Uzbekistan, which were devoid of any BIT’s protection even before, find no respite under the 2024 instrument. One of the foremost deviations in the UAE BIT was the elimination of the criteria of “significance for development” as part of the definition of investment under Article 1.4. It marked a deviation from the Model BIT which incorporated the complete Salini Test laid down in Salini v. Morocco (Art. 1.4), requiring a transaction to demonstrate “Contribution,” “Duration,” “Risk” and “Economic Development” to qualify as an “Investment”’ under the treaty. The  Salini Test, which was a commonly incorporated framework at the time, such as in  the Southern African Development Community Model BIT of 2012 (Art. 2) and the Draft Pan-African Investment Code of 2016 (Art. 4.4),found no place in the UAE BIT, widening the scope of protection by removing a qualifier. However, this precursor to protection of investment has not been excused for Uzbekistan and is in line with other BITs signed by India in recent times with Belarus and Kyrgyzstan. The definition in the Uzbekistan BIT of ‘Investment’ includes an open-ended provision for safeguarding “any other interests of the enterprise which involve substantial economic activity and out of which the enterprise derives significant financial value” which was expressly excluded from the UAE BIT (Art 1.4(h)). This open-ended definition provides wiggle room for investors to stretch the jurisdiction of the treaty to various financial undertakings. This is, however, curtailed significantly by the express exclusion of portfolio investments from this scope (Art. 1.4(i)), an exception not explicitly mentioned in the UAE BIT but found in the Model BIT (Art 1.4(1)). The explicit exclusion of portfolio investments is uncommon and can be found in only a limited number of BITs, such as Brazil’s 2015 Model BIT (Art. 1.3). By contrast, other Model BITs from the same era, such as those of Azerbaijan (2016), the United States (2012), and Serbia (2014) opt not to address the issue explicitly, neither affirming nor rejecting the inclusion of portfolio investments. The treatment of investment, by contrast, excludes the Minimum Standard of Treatment as required under Customary International Law. The UAE BIT expressly states that an investor is entitled to full protection and security but not “in addition to or beyond that which is required by the customary international law regarding the Minimum Standard of Treatment of aliens” (Art. 4.2). This exclusion in the Uzbekistan BIT read with the wording of the UAE BIT does leave ambiguity regarding the Minimum Standard of Treatment being a ceiling or floor for protection of investment. While its express exclusion may be interpreted as a lack of obligation to provide such treatment its reading as a characterization of protection in the UAE could suggest, by contrast, the absence of such ceiling in the Uzbekistan BIT. Similarly, in the UAE BIT investors were granted leniency while pursuing a satisfactory local remedy, with the temporal requirement being reduced to three years (Art. 17.1), as opposed to five years in the Model BIT (Art. 15.2). The Uzbekistan BIT, however, realigns its position with the Model BIT, which requires the investor to pursue a local remedy for five years from the date on which the investor first acquired knowledge of the measure in question, and only after the exhaustion of that period without a result satisfactory to the investor, can it then transmit a notice of dispute (Art. 17.2). The rule on the exhaustion of local remedies does not enjoy general applicability unless explicitly stipulated within the treaty itself. Even among existing BITs, such references are relatively rare, for example, Article 8.2 of the 2007 Albania-Lithuania BIT. Globally, investment treaties tend to adopt a multi-tiered dispute resolution mechanism that prioritizes amicable settlement efforts before arbitration can be initiated. In this context, the BIT imposes procedural burdens that go beyond the prevailing international trend, which has largely dispensed with the requirement to exhaust local remedies. Even in the adjudication of claims, the BIT tilts judicial interpretation in the favour of States. It requires the adjudicator to interpret the conduct of the parties with a high level of deference that international law accords to States with regard to their development and implementation of domestic policies (Art. 25.1). The margin of appreciation is hence mandated to be large in the adjudication of such claims, further skewing the balance of power in favour of the host State. It can therefore be observed that many of the favourable leniencies extended to the UAE were a result of its significantly greater negotiating power, rather than a consistent approach adopted by India across its BITs. On several aspects, the model BIT has been adopted. That said, the Uzbekistan BIT does not represent a standard-form agreement. It contains various modifications—some aligned with those made in the UAE BIT, and others that go even further. Continuing Strides in the New Approach The Uzbekistan BIT provides for a general stipulation that States have the power to undertake regulatory measures required to ensure that development in its territory is consistent with the goals and principles of sustainable development, and other legitimate social, economic, environmental or any other public policy objectives (Art. 3). This stipulation bars any claim arising out of such policy measures. However, this provision is qualified by certain conditions. Albeit absent from the Model BIT and present in the UAE BIT, it presents itself in a form that finds middle ground between the two. While this power under the UAE BIT remains largely untethered (Art. 3), in the Uzbekistan BIT, such measures must be in accordance with Customary International Law, non-discriminatory in nature, and be understood as embodied within a balance of the rights and obligations of Investors and Investments (Art. 3). The requirement in the UAE BIT, on the other hand, are more open ended, requiring only a legitimate public policy objective. Another provision in the Uzbekistan BIT which has is not in the Model BIT is the express exclusion of third-party funding (Art. 16). The decision to explicitly ban third-party funding is significant, especially in light of a recent case where an investor obtained such funding in a dispute under the 1999 India-Australia BIT. This restriction highlights India’s growing intent to protect its position in international arbitration and to prevent possible imbalances that third-party funding could cause. The issue of third-party funding in Investor-State Dispute Settlement (ISDS) has been flagged as a matter of concern by UNCITRAL Working Group III, particularly due to ethical implications such as the potential influence of funders on the arbitral process. In its deliberations, the Working Group has proposed various regulatory approaches; namely, prohibition, restriction, and permissive models. Although many BITs do not explicitly address third-party funding, a restrictive approach appears to be more common, allowing states to impose specific conditions on such arrangements. Notable examples include the 2019 EU-Vietnam Investment Protection Agreement (Art. 3.36), the 2019 Australia-Hong Kong Investment Agreement (Art. 24), and the 2019 United States-Mexico-Canada Agreement (Art. 14.D.5). Given this context, it will be worth observing whether the prohibition model gains broader acceptance among states concerned with the challenges posed by third-party funding in ISDS. The Uzbekistan BIT incorporates  some innovative provisions yet most of the provisions are largely reaffirmations of the more conservative elements of the Model BIT. Notably, one of the significant progressive developments is the express inclusion of a provision for counterclaims under Article 16. Both the substance of this provision and the broader significance of recognizing counterclaims within the framework of a BIT are examined in the following section. The Provision for Counterclaim Investment tribunals, ICSID, in particular, have observed an increase in the number of counterclaims filed in BIT proceedings. In response, both the host states in the Uzbekistan BIT presumably seek to clearly and explicitly delineate their authority to bring such counterclaims by including provisions concerning counterclaims. The ability to bring counterclaims is an essential component of a respondent’s right to present its arguments on equal terms with the claimant, rooted in general legal principles and driven by considerations of fairness. It seeks to balance the asymmetry of the current investment regime where only investors, as claimants, have traditionally been empowered to initiate claims against host States for breaches of treaty obligations. States, on the other hand, are often left without an effective forum to raise their own claims of breach of treaty obligations. This structural imbalance not only limits the host State’s ability to seek redress but also undermines the principle of equality of arms and risks incentivizing opportunistic or irresponsible conduct by investors. International jurisprudence has affirmed that, even in the absence of explicit provisions authorizing counterclaims, arbitral tribunals possess an inherent jurisdiction to entertain them, thereby ensuring both parties have a fair chance to be heard while also promoting consistency in decision making and fostering procedural economy. In this context, it is important to note that despite a few decisions stating otherwise, the absence of treaty language on counterclaims, or the exclusive reference to an investor’s right to bring claims, does not by itself preclude a State from asserting counterclaims. Nevertheless, the right to bring counterclaims is not without limitations. In addition to the inherent jurisdictional confines of a tribunal, a counterclaim must satisfy the well-established requirement of a “direct connection” to the principal claim—a standard recognized across domestic and international jurisdictions. It would be for the sole discretion of the court or tribunal to decide whether, given the circumstances of the case, the counterclaim is, in fact, sufficiently connected to the principal claim. This requirement serves to distinguish true counterclaims from unrelated cross-claims, and to prevent the conflation of mere defences with counterclaims aimed solely at dismissing the claimant’s primary legal action. Furthermore, BITs are grounded in a fluid concept of consent, with States agreeing on stipulations, not investors, who may very well be the subject of such counterclaims. Accordingly, it is imperative that any counterclaim fall within the confines of the dispute brought forward by the investor, thereby preserving the tribunal’s jurisdictional competence. A valid counterclaim must thus constitute an independent yet responsive legal action by the respondent, asserting that the investor has breached obligations owed to the State, with the counterclaim maintaining a direct and substantive connection to the original claim. In line with this, the inclusion of a counterclaims provision in the Uzbekistan BIT is not as radical as to newly confer upon States the right to bring such claims; rather, it represents a step towards explicitly delineating the scope of that right. Under the Uzbekistan BIT, the State may initiate counterclaims against the investor for a breach of its obligations under chapter II of the Treaty. Furthermore, the BIT also clarifies that any counterclaims initiated before the Tribunal would not act as a bar or operate as res judicata for the purposes of any legal, enforcement or regulatory action in accordance with the Laws of the Host Party or in any other proceedings before judicial bodies or institutions of the Host Party. The provision does away with the little ambiguity regarding the ability of states to file counterclaims, as well as clarifies the scope and confirms that such proceedings have no impact on any proceedings under domestic laws. The provision is hence not so much granting States a new power as explicitly delineating its contours. Conclusion Although the Uzbekistan BIT developed to enhance commercial relations, it adopts a more stringent approach than other recent treaties—such as the India–UAE BIT—and aligns more closely with India’s Model BIT. This reflects that, despite India’s efforts to strengthen bilateral investment ties, its approach remains tempered by a continued scepticism toward investment arbitration, likely shaped by high-profile disputes such as the Vodafone and Cairn Energy cases. Nevertheless, while much of the treaty reflects India’s cautious stance, it is not merely a replication of earlier instruments. Instead, it demonstrates a calibrated openness to progressive innovations—where regulatory priorities align and procedural safeguards are maintained in balance. Article 16 includes counterclaims, a feature among the most prominent innovations. This is the first of its kind in India’s BIT practice. Likewise, they expressly prohibit third-party funding to preserve procedural integrity and reduce external influence on arbitral proceedings. This is representative of a proactive stance about a globally controversial issue. Another example of this evolving approach lies in the regulatory autonomy clause, which permits States to undertake measures to pursue sustainable development and public welfare objectives. This power is, however, qualified in the Uzbekistan BIT by customary international law safeguards and non-discrimination requirements unlike the UAE BIT's more open-ended version. The India-Uzbekistan BIT, in its sum, reflects a treaty model that is not at all dogmatic or static. It signals India's continued commitment for the purpose of preserving sovereign policy space while also engaging in contemporary reform discourses within international investment law. As future BITs unfold, this hybrid model with roots in calculated restraint, that is also willing to innovate, may well define India’s evolving treaty practice and influence broader trends in global investment governance. *Samir Malik is a Partner at DSK Legal with over 15 years of experience in civil, commercial, and regulatory litigation, as well as arbitration. He has successfully led several groundbreaking and precedent-setting litigations in India. **Mohammad Shahan Ulla is a Principal Associate at DSK Legal specializing in International Dispute Resolution. He holds an Advanced LLM in International Dispute Settlement and Arbitration from Universiteit Leiden. ***Aryan Mehta is an Associate in the Dispute Resolution team at DSK Legal, also based out of the firm’s New Delhi office. He earned his Bachelor of Laws degree from Jindal Global Law School.

Introduction Few frustrations compare to owning an unreliable vehicle. A car that repeatedly breaks down despite multiple repairs may be considered a “lemon”, a term popularized in the U.S. In such cases, consumers may be entitled to a refund, replacement, or compensation under “lemon laws”—a critical protection that has become standard in several countries. Lemon laws generally mandate that automobile manufacturers must either replace a faulty vehicle or reimburse the purchase price if a defect persists after a set number of repair attempts. Historically, India lacked dedicated lemon laws, leaving consumers with limited recourse under general legal provisions such as the Sale of Goods Act, 1930, the Law of Torts, and common law principles. However, 2019 marked a pivotal shift with the enactment of the Consumer Protection Act, 2019 and the Motor Vehicles (Amendment) Act, 2019. These “Twin Amendments” significantly strengthened product liability and recall mechanisms, impacting not only Original Equipment Manufacturers (OEMs) but the entire automotive supply chain. Given India’s status as one of the world’s largest automobile markets, this article evaluates whether the new legal framework balances consumer rights with operational challenges faced by manufacturers. Prior to the Twin Amendments of 2019 Before 2019, India had no statutory framework governing vehicle recalls, relying instead on the voluntary SIAM Code introduced by the Society of Indian Automobile Manufacturers in 2012. This code permitted manufacturers to notify owners or the government of vehicle defects, but without binding timelines, making recalls discretionary. Indian courts did not impose strict liability for product defects. Relief was typically granted within the confines of warranty clauses. For instance, in Maruti Udyog Ltd. v. Susheel Kumar Gabgotra, the Supreme Court held that manufacturers were only required to repair or replace defective parts under warranty and not the entire vehicle—even after multiple repair attempts. Courts often ordered limited compensation for serious defects involving brakes, engines, or body integrity. The burden remained on consumers to prove an "inherent manufacturing defect," without which manufacturers faced minimal liability. As a result, minor and even serious defects were often inadequately addressed. With robust lemon laws emerging globally, India’s outdated system necessitated reform, leading to the introduction of the Twin Amendments. Post Twin Amendments of 2019 India’s first formal product liability regime was introduced through the Consumer Protection Act, 2019 (“CP Act”), followed by sweeping changes to the Motor Vehicles Act, 1988 via the Motor Vehicles (Amendment) Act, 2019 (“MV Amendment Act”). These laws together established a comprehensive framework for vehicle recall and product liability, extending accountability to OEMs, component suppliers, distributors, and service providers. Motor Vehicles (Amendment) Act, 2019 The MV Amendment Act empowered the Ministry of Road Transport and Highways (MoRTH) to mandate recalls of vehicle models deemed defective and hazardous to safety or the environment. MoRTH may also act upon defect reports from consumers or other stakeholders. If a component is found defective, recalls may extend to all vehicles using it. Manufacturers must then compensate consumers, repair or replace the part, or face prescribed penalties. Voluntary recalls are incentivized, with no additional penalties imposed. The Act authorizes the Central Government to appoint investigating officers to enhance recall oversight. Section 110A(6) led to the insertion of Rule 127C into the Central Motor Vehicle Rules, 1989, detailing procedures for recall notices. The SIAM recall data post-implementation for the year 2021-2024 is as follows: 2021: 2 Wheeler – 10,74,358, Passenger Car- 2,62,865, Total No. of Vehicles- 13,37,223. 2022: 2-Wheeler- 1,94,397, Passenger Car- 94,368, Total No. of Vehicles- 2,88,765. 2021: 2-Wheeler- 1,57,820, Passenger Car- 1,27,086, Total No. of Vehicles- 2,84,906 2024: [till 25.07.24]- 6,89,203, Passenger Car- 27,607, Total No. of Vehicles – 7,16,810 Total: 2-Wheeler- 21,15,778, Passenger Car- 5,11,926, Total No. of Vehicles- 26,27,704 Consumer Protection Act, 2019 The CP Act ushered in a paradigm shift from “buyer beware” to “seller beware.” Section 2(34) defines “product liability” as the duty of a manufacturer or seller to compensate for harm caused by a defective product. “Harm” includes physical injury, mental anguish, death, and damage to property, though not harm to the product itself or purely commercial losses. Chapter VI imposes liability not only on manufacturers but also on sellers and service providers. The term “product” includes fully assembled goods and individual components. Indian courts have held manufacturers solely liable in some cases, such as Hindustan Motors Ltd. v. N. Siva Kumar, while also upholding joint liability, as in C.N. Anantharam v. Fiat India Ltd. However, in Tata Motors Ltd. v. Antonio Paulo Vaz, the Court limited liability to cases where the manufacturer was aware of the defect. The CP Act also extends compliance obligations to endorsers, marketers, and importers, ensuring a more robust accountability framework across the supply chain. Impact Analysis: Balancing Stakeholder Interests The Twin Amendments significantly enhanced consumer protections, empowering buyers to claim compensation for personal and financial harm caused by defective vehicles. Voluntary recall provisions incentivize manufacturers to act preemptively, promoting consumer trust. For manufacturers, the regime offers reputational safeguards if issues are addressed swiftly but introduces a complex compliance burden. Hybrid recalls—where multiple suppliers are involved—can lead to disputes over liability, especially within global supply chains. The codification of recall and liability standards builds public confidence in India’s auto sector. Still, small manufacturers face disproportionate risks. For them, compliance costs can be burdensome. Penalties for mandatory recalls, while fair, may cripple smaller players. Meanwhile, reputational damage from voluntary recalls remains a risk in the digital age. A more refined approach is needed—especially in hybrid recall scenarios—to define fault allocation clearly. Introducing proportional liability and clearer guidelines for joint responsibility would better serve all stakeholders. Conclusion The Consumer Protection Act, 2019 and the Motor Vehicles (Amendment) Act, 2019 represent a landmark evolution in India’s product liability framework, bringing the nation closer to global standards of consumer protection. By mandating recalls and imposing strict liability, these laws significantly improve safety and accountability. Yet, as India's automobile sector grows more complex, legal frameworks must evolve further. Policymakers should focus on protecting vulnerable supply chain participants and ensuring balanced liability allocation. With these refinements, India’s lemon laws can truly achieve their intended objective: safeguarding consumers while ensuring a just and competitive industry. Authored by Mr. Samir Malik, Partner, DSK Legal & Mr. Mahip Singh, Associate Partner, DSK Legal REFERENCES Suneeti Rao. “‘Lemon Law’ of Indian Auto Users.” Economic and Political Weekly, vol. 37, no. 9, 2002, pp. 819–21. JSTOR Louis J. Sirico Jr. Automobile Lemon Laws: An Annotated Bibliography, 8 Loy. Consumer L. Rev. 39 (1995). Motorindia, SIAM Code on vehicle recall comes into force, Motorindia (Aug. 17, 2024, 3:15 PM). Maruti Udyog Ltd. v. Susheel Kumar Gabgotra, (2006) 4 SCC 644, paras. 10, 11. M/s Jaycee Automobiles v. Raj Kumar Agnihotri, 2016 SCC OnLine NCDRC 1963, para. 19. Sushila Automobiles Pvt. Ltd. v. Dr. Birendra Narain Prasad, 2010 SCC OnLine NCDRC 144 N. Anantharam v. M/s Fiat India Ltd., (2011) 1 SCC 460, para. 20. The Consumer Protection Act, 2019, §§ 2(34), 82-87 (hereinafter ‘CP Act’). The Motor Vehicles (Amendment) Act, 2019, No. 32, Acts of Parliament, 2019 (India) (hereinafter ‘MV Amendment Act’). Hindustan Motors Ltd. v. N. Siva Kumar, (2000) 10 SCC 654. N. Anantharam v. M/s Fiat India Ltd., (2011) 1 SCC 460, para. 20 Tata Motors Ltd. v. Antonio Paulo Vaz, AIR 2021 SC 1149

Background In its Statement on Developmental and Regulatory Policy Measures issued in October 2023, the RBI recognised the importance of having a strong regulatory framework to govern the Indian project finance landscape, especially with respect to income recognition, asset classification and provisioning requirements for projects under implementation. RBI indicated that extant prudential norms would soon be replaced by a comprehensive framework applicable to all regulated entities to harmonize the Indian regulatory landscape for project financing to projects under implementation. Soon after, the RBI released the ‘Reserve Bank of India - Prudential Framework for Income Recognition, Asset Classification and Provisioning pertaining to Advances - Projects Under Implementation, Directions, 2024’ (“Draft Framework”), inviting comments and suggestions from industry stakeholders, experts, academicians, legal experts and the general public. The Draft Framework proposed to rehaul the existing ‘Prudential Framework for Resolution of Stressed Assets’ issued on June 7, 2019 (“Prudential Framework”) which excluded guidance on restructuring of borrower accounts pertaining to projects under implementation involving a change in date of commencement of commercial operations (“DCCO”). Thus, the RBI (Project Finance) Directions, 2025 were issued vide circular no. RBI/2025-26/59 on June 19, 2025 (“2025 Directions”) taking into account the  feedback on the Draft Framework. Given below is a synopsis of lenders’ responsibilities in relation to, amongst other things, provisioning, resolution and monitoring, in respect of project finance accounts.   Applicability and Effectiveness The 2025 Directions shall be effective from October 01, 2025 and are applicable to the following sectors, where projects[1] are yet to achieve financial closure: infrastructure sector; and non-infrastructure (including commercial real estate (“CRE”) and CRE-residential housing (“CRE-RH”)) sectors. The following lenders regulated by RBI (“REs”) come under the purview of the 2025 Directions: commercial banks; non-banking financial companies; primary (urban) cooperative banks; and all India Financial Institutions.   Exposures qualified as ‘project finance’ RE’s exposure would qualify as ‘project finance’ only if the following conditions are satisfied: predominant source of repayment (minimum 51%) as envisaged at the time of financial closure must be from cashflows of the project being financed; and all lenders must have a common loan agreement (which may have different loan terms for each lender but should have the same DCCO) agreed between the lenders and the borrower.   Project Phases RBI has categorized projects into the following 3 (three) phases: Design phase – designing, planning, obtaining all applicable clearances/approvals till financial closure; Construction phase – after financial closure up to and the day prior to actual DCCO; and Operational phase – from the actual DCCO up to the day of repayment of the project finance exposure.   Sanction, Disbursement, Monitoring – some critical obligations of lenders Prior to loan sanction   ·       achievement of financial closure and original DCCO documented; ·       post DCCO repayment schedule to consider initial project cash flows; ·       repayment tenor does not exceed 85% of economic life of project; ·       until project achieves actual DCCO, each individual lender should have not less than: o   10% of aggregate exposure for loans up to INR 1500 crores; and o   5% or INR 150 crores, whichever is higher, for aggregate exposure more than INR 1500 crores. ·       All approvals / clearances for constructing the project to be obtained, unless specific timelines provided under law. Pre-disbursement conditions ·       loan agreement to specify disbursement schedule vis-à-vis project completion milestones; ·       minimum requirement for right of way/sufficient land is in place: o   for infrastructure projects under public-private partnership (PPP) model – 50%; o   for other projects (non-PPP infrastructure, and non-infrastructure including CRE and CRE-RH) – 75%; and o   for transmission line projects – as decided by lender. ·       for infrastructure projects under PPP model, declaration of the appointed date necessary for fund-based credit facilities; ·       disbursal to be proportionate to project completion milestones (as certified by the LIE), infusion of equity and other finance.   Resolution Stress-related accounts lenders to monitor project performance and stress build-up regularly; resolution plan to be initiated as soon as any signs of stress build-up; occurrence of a ‘credit event’ with any lender, to trigger collective resolution under the Prudential Framework; credit events to be reported to the Central Repository of Information on Large Credit (CRILC) as well as other lenders in the consortium/multiple lending arrangement, by the relevant lender[2]; and lenders to review the debtor account within 30 (thirty) days from the date of such credit event.   Extension of original / extended DCCO accounts satisfying conditions specified in Chapter III of the 2025 Directions, may continue to be classified as ‘Standard’, if the resolution plan is implemented, subject to fulfilment of the following conditions: the DCCO deferment and consequential shift in repayment schedule should be of the same or shorter duration and within the limits specified in the 2025 Directions[3]; financing of any cost overrun should not exceed 10% of the original project cost (excluding interest during construction); any financing through standby credit facility should be specified upfront or approved at the time of financial closure and premium should also be specified in the documentation; and financial parameters should remain unchanged for the lenders.   Change in scope and size of project due to extended DCCO accounts can still be categorised as ‘Standard’, subject to compliance with certain conditions including: increase in project cost (excluding cost-overrun in respect of the original project) is 25% or more; lender re-assesses the project viability; revised credit rating not below previous rating, by more than 1 (one) notch; for unrated debt, it should be at least investment grade if aggregate lender exposure exceeds INR 100 crores. Re-classification under this head is permitted only once in the lifetime of the project. If the resolution plans are not implemented successfully, the accounts need to immediately be downgraded to NPA status. Upgradation of NPA accounts is permitted only upon successful implementation of the resolution plan / performance post DCCO. Provisioning   Asset Classification Sector Construction Phase Operational Phase – after commencement of repayment of interest and principal     Standard CRE 1.25% 1.00% CRE-RH 1.00% 0.75% All others 1.00% 0.40% DCCO Deferred Standard Assets Infrastructure 0.375% (quarterly in addition to standard provisioning) to be reversed upon commencement of operations Non-infrastructure 0.5625% (quarterly in addition to standard provisioning) Existing Projects As per Prudential Guidelines NPAs As per provisions of the Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated April 01, 2025   Miscellaneous   The Prudential Framework will continue to apply where the loan does not qualify as ‘project finance’ or where the project is in the operational phase.   ‘Credit event’ has been defined in the 2025 Directions to mean any of the following: default with any lender; need for extension of the original/extended DCCO or expiry of original/extended DCCO; need for infusion of additional debt; the project is faced with financial difficulty as determined under the Prudential Framework.   Maintenance of database and disclosures   Lenders are required to maintain and update project specific data, in electronic format on an ongoing basis. Lenders need to disclose resolutions plans implemented by them, in their financial statements.   The 2025 Directions also stipulate penal consequences for lenders including supervisory and enforcement action, against non-compliance entities.   Conclusion   The 2025 Directions place considerable onus on REs with respect to monitoring stress, provisioning, disclosures, ensuring satisfaction of conditions prior to sanctioning and disbursement, etc. However, early identification of stress, guidance on asset classification in various scenarios (without downgrading the asset), satisfaction of essential conditions prior to loan sanctioning (including ensuring availability of project land), etc., are key to reducing the risk of project delays, losses to REs (due to delayed DCCO and cash flows) and resultant NPAs.   RBI has kept the ‘Reins in Check’ to ensure discipline and a healthy regulated financing market, by delegating several responsibilities to REs. However, RBI’s plan is clear - to ease the project financing exercise for both REs and borrowers by providing a robust framework and clarity on critical aspects of the project cycle. All in all, the 2025 Directions will hopefully catapult project financing and help to accelerate growth in the infrastructure and non-infrastructure (including CRE) sectors, a key agenda for the GoI. [1] The term ‘Project’ has been specifically defined in the 2025 Directions as any “ventures undertaken through capital expenditure (involving current and future outlay of funds) for creation/expansion/upgradation of tangible assets and/or facilities in the expectation of stream of cash flow benefits extending far into the future.” [2] Instructions in this regard to be issued in due course. [3] Permitted deferment of DCCO is up to 3 years for Infrastructure projects and up to 2 years for non-infrastructure projects

Artificial Intelligence has transformed the way information is processed and consumed, offering unprecedented capabilities and value across fields like medicine, law, journalism, and finance. However, alongside its advancements, AI models have been riddled with technological and regulatory challenges. One such conundrum has been regulation of AI hallucinations. AI hallucination occurs when Generative AI models (GenAI) produce factually inaccurate or misleading responses, and stem broadly from biases in or quality of training data and model limitations. AI models may be categorised as intermediaries in instances like AI-powered search engines that retrieve and summarize third-party content, chatbots that transmit pre-existing information without independent analysis, and content recommendation systems that rank user-generated content without modification. Such platforms may be protected under safe harbour provisions given their role as a mere conduit. However, GenAI operates differently – it independently generates responses by self-learning from existing datasets, blurring liability lines. From fabricating legal cases to generating false news, GenAI poses risks of misinformation. In certain cases, AI hallucinations may pose a cybersecurity threat by misleading developers into deploying codes which may compromise systems. In 2023, Alphabet Inc lost $100 billion in market value after Bard shared inaccurate information in a promotional video exemplifying the potential fallout of GenAI. In sensitive sectors such as healthcare, law, and finance, such hallucinations can mislead diagnoses, distort legal arguments, and impact financial decisions, leading to reputational damage, regulatory scrutiny, and legal liability. Another recent illustration is the order issued by the Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) in Buckeye Trust v. Principal Commissioner of Income Tax (ITA No. 1051/Bang/2024) which relied on four fictitious legal precedents generated by an AI tool. The Liability Web Determining liability for AI hallucinations is a challenge – since GenAI models rely on probabilistic reasoning, their responses are neither fully deterministic nor easily traceable. The black-box nature of large language models (LLMs) further hampers determination of accountability. Ambiguous or low-quality data is another key contributor to such hallucinations. As AI becomes integral to decision-making, a crucial question arises – who is responsible when AI-generated misinformation leads to real-world consequences? Should accountability rest with developers, the organizations deploying these systems, or users relying on their outputs? If misinformation stems from flawed training datasets rather than a design flaw, should liability rest with developers, data sources, or platform providers? At the heart of this issue is the debate over responsibility. AI companies argue that hallucinations are an inherent limitation of GenAI models, placing the burden on users to verify the responses/ outputs. While regulators are exploring frameworks to hold developers accountable for accuracy in their system generated outputs, reactive fixes may be insufficient and AI regulation will need to focus on striking a balance between the mechanics of the model and the impact of the output. For instance, the EU AI Act classifies AI systems by risk level, enforcing stringent accuracy requirements for high-risk AI applications in legal and healthcare systems. This approach was evident in the shutdown of Tessa, an AI-powered mental health chatbot that provided harmful advice to users with eating disorders. However, this approach has not been consistent globally. The US AI Bill of Rights adopts a more user-centric approach, emphasizing on verification by users rather than developer liability, and limiting developer liability only to the extent of transparency, content labelling, and safety measures for advanced AI systems – a stance tested when two lawyers and a law firm were fined for citing fake cases generated by ChatGPT in a court filing. Other countries, such as the UK, China, Australia, and Singapore, are refining oversight through sectoral regulations, non-binding guidelines, and targeted compliance measures, focusing on explainability, accountability, and safeguards against AI hallucinations and AI-generated misinformation. Responsible AI Deployment – A Shared Responsibility Given the wide range of complexities, it seems that a shared-responsibility regulatory model is emerging, distributing liability for AI hallucinations between developers, deployers and users based on factors such as control, foreseeability, and negligence. From a developer's perspective, AI regulations should prioritize the adoption of best practices to mitigate hallucinations, without becoming overly prescriptive. These best practices should broadly centre on rigorous dataset validation—ensuring that models are trained on high-quality, diverse, and bias-mitigated data—and the implementation of regular audits to ensure models remain responsive and adaptive to evolving risks. From a deployer standpoint, key mitigation measures may include mandatory disclosure and warning labels, informing users about AI limitations and error rates and implementing human-in-loop verifications. Additionally, users may be provided with an option to flag hallucinated responses, triggering a review by a fact-checking unit for dataset corrections. From a user’s perspective, it is essential to exercise due diligence and avoid negligent reliance on AI systems. Being informed, cautious, and deliberate in how AI outputs are interpreted and applied can help prevent unintended consequences—especially in high-stakes or professional contexts. Together, enforcing layered responsibilities reflects a more nuanced and resilient approach towards governing AI hallucinations - one that acknowledges the dynamic interaction between technology and its human handlers. By aligning incentives and accountability across the AI lifecycle, a shared-responsibility model fosters both innovation and trust in the safe, ethical deployment of GenAI. Authored by: 1. Mr. Chirag Jain, Associate Partner, DSK Legal ([email protected]) 2. Ms. Shreya Singh, Senior Associate, DSK Legal ([email protected]) 3. Ms. Drishti Jain, Associate, DSK Legal ([email protected])

DSK Legal advised and assisted OneSource Specialty Pharma Limited (formerly known as Stelis Biopharma Limited) (the “Company”) in connection with the filing of the Information Memorandum pursuant to the scheme of arrangement amongst Strides Pharma Science Limited, Steriscience Specialties Private Limited and the Company (the “Scheme”) for the listing of 11,44,36,021 equity shares of ₹1 each of the Company. The Company is a fully integrated, multi-modality specialty pharmaceutical contract development and manufacturing organisation company, focused on developing and manufacturing drug device combinations, biologics, sterile injectables and oral technologies like soft gelatin capsules. The Scheme got sanctioned by the NCLT, Mumbai on November 14, 2024, and the Information Memorandum was filed with BSE and NSE on January 21, 2025. The Equity Shares of the Company got listed on BSE and NSE on January 24, 2025. DSK Legal assisted the Company inter alia in the (i) conducting diligence and drafting of the Information Memorandum; (ii) drafting of all board resolutions and shareholder resolutions; (iii) drafting and commenting on the standard certificates, auditor certificates and advertisements; and (iv) reviewing and commenting on SEBI applications. The deal team consisted of the following: Mr. Avinash Poojari (Associate Partner), Ms. Akanksha Dubey (Principal Associate) and Ms. Sachi Ray (Associate). Mr. Anand Desai (Managing Partner) acted as the engagement and relationship partner.

Infifresh Foods Private Limited operating under brand name ‘Captain Fresh’ (CF India) and its overseas subsidiary Infifresh Foodtech AS (CF Norway) (collectively “CF Group”)acquired 100% shareholding of Koral S.A. Poland (“Koral”) from its shareholders, GRWC Holdings Limited (a private equity fund) and Futura Simul Fundacja Rodzinna (family foundation) (collectively “Sellers”) in share swap deal. DSK Legal and Herbert Smith Freehills acted as lead transaction counsel and advised and assisted CF Group in: (a) structuring of and implementing the overall share swap structure with the support of foreign legal counsels at relevant jurisdiction; (ii) drafting, reviewing negotiating and finalizing transaction documents reflecting the swap structure; and (iii) assistance in end-to-end closing in Poland, Norway and India and regulatory filings in India. The closing of the aforesaid transaction steps completed on December 23, 2024 and was undertaken simultaneously in Poland, Norway and India. DSK team for this transaction was led by Jayesh Kothari (Partner), Rajlaxmi Kale (Principal Associate), Hemanshi Gala (Senior Associate), Kunal Chopra (Senior Associate) and Sreedatri Dhar (Associate).   Herbert Smith Freehills, DZP Law (Polish Counsel), Schjodt Legal (Norwegian Counsel), KPMG Legal (Norway) advised CF Group. Clifford Chance acted as lead counsel along with BAHR A.S, and AZB & Partners for the Sellers. KPMG Norway, BDO India and E & Y Global acted as tax advisors to this transaction. Antarctica Advisors acted as investment bankers to this transaction.  

DSK Legal assisted and advised Eternis Fine Chemicals Limited (“Eternis”) and Eternis Fine Chemicals UK Limited in relation to acquisition of 100% shareholding of Sharon Personal Care (“Sharon PC”),having manufacturing capabilities and innovation labs in Italy and Israel, distribution sites in US, Italy, Germany, and France as well as a global distribution network, from Tene Capital Fund and Burstein Family (“Transaction”). The Transaction involved various complexities and spread across multiple jurisdictions including Israel, Italy, United Kingdom, India and the United States. Eternis, is a wholly owned business of the renowned Mariwala family that has been in the fragrance and flavour industry since decades. The aroma chemicals business is operated by the Mariwala family. Eternis has four manufacturing facilities in the State of Maharashtra (India) as well as a state-of-the-art manufacturing facility acquired in the United Kingdom, with a total capacity of over 66,000 tons per year of Aroma Chemicals & Acetates. It has a turnover of over US$ 250 Million and has 600+ employees. Sharon PC is a global supplier of innovative ingredient solutions for a broad range of personal care products, with specialized expertise in trending market segments. Its product portfolio includes unique preservation systems, green functional chemistries, bio-active ingredients and oleosome technology. With a solid foundation in environmentally sustainable chemistry, Sharon delivers multifunctional ingredient solutions that help differentiate personal care products in a fast-changing market. Sharon PC employs about 100 people worldwide, with manufacturing logistics and scientific facilities in Italy & Israel and distribution network in various countries across the globe. As a result of this strategic Transaction, Eternis further expands its global footprints, whilst leveraging the multi-location research labs, manufacturing and distribution platforms. This acquisition marks a significant step to diversify offerings by widening the portfolio into the a diverse but adjacent and fast growing personal care segment. DSK Legal advised and assisted Eternis, end-to-end, acting as lead transaction counsel, including in relation to: (a) structuring of the Transaction; (b) facilitating the due diligence of the Sharon PC and its subsidiaries; (c) reviewing, negotiating and finalising the transaction documents; (d) execution and closing of the Transaction; (d) advising on obtaining W&I insurance including review of the W&I insurance policies; and (e) undertaking merger control analysis across multiple jurisdictions. The Transaction involved advisors from multiple jurisdictions, across the globe. The advisors representing Eternis on the Transaction involved Rothschild & Co (as the financial advisor), Mayer Brown (London), Goldfarb Gross Seligman (Israel) and PedersoliGattai (Italy) (as the foreign legal advisors and for conducting legal due diligence on Sharon PC and its subsidiaries) and Ernst & Young (as the financial & tax due diligence advisor). The sellers, Tene Capital Fund and Burstein Family were represented by Jefferies LLC (as the financial advisor), Erdinast, Ben Nathan, Toledano & Co. (as the legal advisor) and KPMG (as the tax advisor). The team at DSK Legal representing Eternis comprised of: Transaction Team: Mr. Aparajit Bhattacharya (Partner), Mr. Harvinder Singh (Partner), Ms. Shruti Dogra (Associate Partner) and Mr. Manhar Gulani (Senior Associate).  Competition Team: Mr. Abhishek Singh Baghel (Partner), Mr. Shivam Sharma (Associate), and Mr. Ishan Handa (Associate).     Mr. Aparajit Bhattacharya (Partner) acted as the relationship partner and the lead engagement partner for Eternis on the Transaction.  

JOST, one of the world's leading manufacturers and suppliers of safety-related systems for the commercial vehicle industry, has signed a purchase agreement with Unitas Capital Pte. Ltd. and NWS Holdings Limited for the acquisition of all shares in Hyva III B.V., including its direct and indirect subsidiaries worldwide (“Hyva”). With the acquisition of the Hyva Group, JOST intends to further expand its global positioning as a supplier to the commercial vehicle industry. The company operates sales and manufacturing facilities in over 25 countries on six continents and serves manufacturers, dealers and end customers in the transportation, agricultural and construction industries worldwide. JOST currently employs over 4,500 people worldwide and is listed on the Frankfurt Stock Exchange. Hyva is a leading provider of hydraulic solutions for commercial vehicles. Founded in 1979, the company is headquartered in the Netherlands and supplies customers in more than 110 countries. With around 3,000 employees worldwide, Hyva has 14 production facilities in China, India, Brazil, Mexico, Germany and Italy, supplying customers in the transportation, agriculture, construction, mining and environmental industries. DSK Legal advised and assisted JOST in: (a) conducting legal due diligence on the Indian subsidiary of the Company; (b) reviewing the disclosure letter; (c) advising and reverting on the queries raised by the W&I insurer; (d) advising on other deal matters; and (e) the merger control filing in relation to the transaction in India. Mayer Brown is advising JOST comprehensively on the acquisition of the Hyva Group. Mayer Brown's offices in Germany, England, China, Hong Kong, the USA and Brazil were involved in particular, with DSK Legal assisting on the Indian leg of the transaction. At JOST, Dr. Thilo Oldiges, General Counsel, is responsible for the legal aspects. The team at DSK Legal representing JOST comprised of: Transaction and Due Diligence Team: Mr. Aparajit Bhattacharya (Partner), Mr. Harvinder Singh (Partner), Ms. Shruti Dogra (Associate Partner), Ms. Shubhi Ameriya (Principal Associate), Senior Associates, Mr. Manhar Gulani and Ms. Mala Mehto, and Associates, Mr. Brijesh Ranjan Sahoo, Ms. Sumedha Tewari and Ms. Dhvani Shah.  Competition Team: Mr. Kunal Mehra (Partner), Mr. Danish Khan (Principal Associate) and Mr. Aakrit Aditya Sharma (Associate).     Mr. Aparajit Bhattacharya (Partner) acted as the relationship partner and Mr. Harvinder Singh (Partner) acted as the lead engagement partner on the Transaction.  

DSK Legal advised Mandala Capital with respect to its full exit from Edward Food Research and Analysis Centre (“EFRAC”). Mandala Capital’s exit from EFRAC was implemented through primary and secondary investments by QIMA (UK) Limited (“QIMA”). Mandala Capital is a private equity firm specializing in investments across the food and agriculture value chain in South and South-East Asia. Mandala Capital works closely with its portfolio companies to enhance their operational value, drive growth, and build industry leaders to transform existing food systems. EFRAC is one of the largest integrated laboratory testing providers in India, and is engaged in the business of providing testing services for over 500 commodities, serving a wide range of verticals including food, agri, drugs and cosmetics. DSK Legal assisted Mandala Capital in inter alia: (i) reviewing, revising and finalizing the share purchase and subscription agreement (“SPSA”); (iii) drafting, reviewing, revising and finalizing of documents ancillary to the SPSA, including closing documents; and (iii) assisting in the closing of the transaction. The DSK Legal team which represented Mandala Capital comprised of Mr. Hemang Parekh (Partner), Ms. Saumya Malviya (Senior Associate) and Ms. Sharmishtha Bharde (Senior Associate). JSA acted as the legal advisor for QIMA. Fox Mandal acted as the legal advisors for EFRAC and the promoters of EFRAC.