According to sources, the Law Ministry has cautioned the govt that certain clauses in draft inter-governmental agreement, including the one on material breach, are not in India's interest.
Defence Minister Manohar Parrikar on Tuesday said the Law Ministry has made certain "observations" which will be "adequately taken into account" while finalising the Inter-Government Agreement for the purchase of 36 Rafale fighter aircraft from France.
In two separate written replies in Rajya Sabha, he said negotiations on the terms and conditions of the supply, including total cost, actual delivery timelines and guarantee period have not been concluded. Parrikar said that the Indian negotiating team is carrying on its meetings with the French side.
"Ministry of Law & Justice has made certain observations and the same will be adequately taken into account while finalising the IGA, which is still under negotiations," he said without elaborating.
Sources said the Law Ministry has cautioned the government that certain clauses in the draft inter- governmental agreement, including the one on material breach, are not in India's interest. It has advised the Defence Ministry to reconsider certain clauses while finalising the deal.
Sources said one of the issues flagged by the Department of Legal Affairs is that in case of material breach by French companies of their obligations under the supply protocol, the Indian side would first have to take legal recourse against them but cannot involve the French government. It also suggested that the liability clause should be more stringent and include the French government. The clause would come into force in case of any deficiency in completion of the deal by the companies.
In case of a commercial dispute, the arbitration proceedings should take place in India and not Switzerland as suggested in the draft, the Law Ministry has opined. Sources have said that the differences between the two dies have narrowed down a lot. The final deal could be signed this month itself.
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