Forum Selection Clauses at the Order VII Stage: The DQS v. ISACA Case

This article critically examines DQS Certification India Pvt. Ltd. v. ISACA Inc. & Ors., analysing whether an exclusive foreign forum selection clause can be enforced at the threshold when the plaint alleges that the selected forum offers no available remedy, violating Section 28 of the Indian Contract Act, 1872. Drawing on Piramal Healthcare and Modi Entertainment, it explores whether questions of foreign law, jurisdiction and statutory enforceability require adjudication before the clause can be enforced.

The judgment of the Delhi High Court in DQS Certification India Pvt. Ltd. v. ISACA Inc. & Ors., CS(COMM) 611/2021, decided on 26 March 2025, raises an important question concerning the limits of contractual forum selection. The issue is not whether commercial parties may ordinarily agree upon an exclusive foreign forum; established jurisprudence recognises that they may. The more fundamental question is whether a Forum Selection Clause can be treated as determinative at the threshold when the plaint itself pleads that the selected foreign forum does not provide an available legal remedy and that enforcement of the clause would consequently operate as an absolute restraint on legal proceedings in violation of Section 28 of the Indian Contract Act, 1872.

The distinction becomes particularly significant because the Delhi High Court expressly held that part of the cause of action arose within Delhi and that it possessed territorial jurisdiction under Section 20(c) of the Code of Civil Procedure, 1908 (“CPC”). The case therefore turned upon whether the Forum Selection Clause could exclude the jurisdiction of an otherwise competent Indian court. That inquiry required consideration of the Plaintiff’s pleaded challenge to the legal operation and enforceability of the clause itself.

The Plaint Pleaded Absence of an Available Legal Remedy

The Plaintiff’s case was not that Illinois was merely inconvenient, expensive or commercially disadvantageous. The plaint specifically pleaded that the Plaintiff could not maintain the contemplated civil proceedings in Illinois under the applicable Illinois law. The pleaded case was that the Plaintiff did not conduct the relevant business in Illinois, had no employees or office there, could not obtain the authorization which it contended was necessary to maintain the contemplated civil action, and consequently did not have access to the selected foreign judicial remedy. The issue was therefore one of alleged legal unavailability of the selected forum, not merely preference for an Indian forum.

The pleaded absence of the foreign judicial remedy was accompanied by an equally material circumstance: the contractual dispute-resolution arrangement also provided for arbitration, but ISACA refused arbitration when the Plaintiff invoked it. The resulting contention was straightforward: enforcement of the Forum Selection Clause in those circumstances would not merely determine where the Plaintiff must pursue its remedy—it would allegedly leave the Plaintiff without an effective contractual forum in which to pursue that remedy.

The Plaint Expressly Raised Section 28 of the Indian Contract Act

The plaint expressly challenged the enforceability of the foreign forum restriction under Indian law and invoked the principles governing restraint of legal proceedings under the Indian Contract Act. The Section 28 issue was therefore embedded in the original cause presented by the plaintiff; it was not a subsequent argument developed merely to answer ISACA’s application under Order VII Rules 10 and 11 CPC.

The ordinary proposition that commercial parties should be held to their contractual bargain presupposes a bargain capable of lawful enforcement. The question “Should the parties be held to their bargain?” cannot logically be answered before the Court determines the prior question “Is the bargain, as pleaded to operate in this case, legally enforceable?” The distinction between these two questions lies at the heart of the DQS controversy.

The Delhi High Court's Order of 6 December 2021

When the suit first came before the Court, the Plaintiff’s inability to pursue the contemplated foreign remedy was expressly placed before it. The Court recorded the Plaintiff’s submission that the termination was contrary to Illinois law, that “an Indian company cannot initiate any legal proceedings in Illinois”, and that the Defendants had refused arbitration. The Court then recorded the consequential submission: “Hence, he has approached this court.” It was thereafter directed that the plaint be registered as a suit and issued summons.

The order dated 6 December 2021 did not, of course, finally adjudicate the validity or enforceability of the Forum Selection Clause. It establishes that the alleged absence of an available legal remedy in Illinois and ISACA’s refusal of arbitration were foundational elements of the Plaintiff’s case from the commencement of the suit.

A circumstance expressly recorded by the Court at the inception of the suit as explaining why the Plaintiff had approached Delhi could not become immaterial when the Court subsequently examined the legal effect of the very Forum Selection Clause which allegedly created that predicament. The critical procedural question was whether the pleaded case could be determined against the Plaintiff at the threshold under Order VII, Rules 10 and 11 CPC.

Piramal: Foreign Law and the Limits of Party Autonomy

The Delhi High Court’s earlier decision in Piramal Healthcare Ltd. v. DiaSorin S.p.A., CS(OS) 275/2010, decided on 26 August 2010, assumes particular significance at this stage. Piramal recognised that the determination of what the applicable foreign law is may itself constitute a question of fact requiring proof. This principle is directly relevant where the legal availability of the selected foreign forum is disputed rather than admitted.

In DQS, the Plaintiff’s challenge to the Forum Selection Clause specifically depended upon the operation of Illinois law. The relevant question at the Order VII stage was therefore not whether the Plaintiff’s interpretation of Illinois law would ultimately succeed, but whether a disputed question of foreign law requiring proof could be conclusively determined against the Plaintiff while deciding whether the plaint itself should be returned or rejected. The contractual designation of a foreign court and the legal availability of that court are two distinct questions. The former arises from the contract; the latter may depend upon foreign jurisdictional and statutory law requiring proof and adjudication.

Piramal is equally significant on the enforceability of the contractual bargain itself. The judgment recognises that contracts conferring jurisdiction upon foreign courts are not per se contrary to Sections 23 and 28 of the Indian Contract Act, but it expressly qualifies that proposition where the contractual arrangement leaves a party without recourse to courts.

The Section 28 objection, therefore, went to the enforceability of the Forum Selection Clause itself. Before applying the principle that parties should be held to their bargain, the Court was required to address the logically prior question of whether the bargain, in the circumstances pleaded, deprived the Plaintiff of recourse to an effective legal remedy. Party autonomy could determine the outcome only after, and not before, the legality and operative effect of the bargain had been determined.

Modi Entertainment: A Forum Selection Clause Is Not Invariably Binding

The Supreme Court’s decision in Modi Entertainment Network & Anr. v. W.S.G. Cricket Pte. Ltd., (2003) 4 SCC 341, recognises the importance of respecting an exclusive foreign forum selected by commercial parties, but it does not elevate that principle into an inflexible rule. The Supreme Court expressly recognises exceptional circumstances in which the parties need not be held to the selected forum.

Of particular relevance is the recognition in Modi Entertainment that circumstances may arise in which prosecution before the chosen foreign court becomes impossible because the essential jurisdiction of that court does not exist. Parties may select a forum, but their agreement cannot create jurisdiction which the law governing that forum does not confer.

The Order VII Problem: Testing the Plaint Is Not a Trial

Order VII, Rules 10 and 11 CPC operate at the threshold and do not confer jurisdiction upon the Court to conduct a trial of disputed questions merely because those questions bear upon jurisdiction or maintainability. The inquiry proceeds upon the plaint and the Plaintiff’s case as pleaded. The distinction between testing a plaint and adjudicating the correctness of the facts and law pleaded in it is fundamental. What remained, once territorial jurisdiction was found, was ISACA’s contention that the jurisdiction which Delhi otherwise possessed stood excluded by the Forum Selection Clause.

The difficulty is that the same plaint which contained the Forum Selection Clause also contained the pleaded reasons why the Plaintiff contended that the clause could not lawfully exclude the Indian remedy. The Forum Selection Clause could therefore not be isolated from those pleadings while testing the plaint.

If the Plaintiff’s interpretation of Illinois law was incorrect, that could be determined upon adjudication. If the selected foreign forum was in fact legally available, that too could be determined. But these conclusions could not simply be assumed to reach the antecedent result that the plaintiff itself should not proceed. A disputed proposition cannot first be conclusively determined against the Plaintiff and then be used as the premise for rejecting the very plaint in which that proposition is pleaded.

The Question under Order VII Rule 10 and Rule 11 Was Antecedent to the enforcement of the Forum Selection Clause

This does not diminish the legal importance of Forum Selection Clauses. A contractual provision cannot enlarge the adjudicatory scope of Order VII. Even a strongly worded Forum Selection Clause must be adjudicated through the procedure which the CPC permits.

The Proper Sequence of Inquiry at the Order VII Stage

The proper approach at the threshold is to begin not with the Forum Selection Clause, but with the statutory limits of the jurisdiction being exercised under Order VII Rules 10 and 11 CPC. The first question is whether, taking the plaint and the documents relied upon by the Plaintiff as they stand, the Court lacks jurisdiction or the plaint attracts any of the statutory grounds for rejection. Only thereafter can the Court consider whether the foreign Forum Selection Clause presents an issue capable of determination within those limits.

Where enforcement of the Forum Selection Clause depends upon determining the meaning and effect of foreign law, the jurisdictional competence of the selected foreign court, the Plaintiff’s legal ability to invoke that jurisdiction, the availability of the contractual remedy, and the enforceability of the resulting restriction under Section 28 of the Contract Act, the Court is no longer merely reading the Forum Selection Clause. It is determining disputed legal and factual predicates upon which the enforceability of that clause depends.

The controlling procedural question can therefore be stated directly: Can a Court determine, at the threshold under Order VII Rules 10 and 11 CPC, disputed questions concerning foreign law, foreign jurisdiction, availability of the selected remedy and statutory enforceability, and then use those determinations to terminate the very suit in which those questions have been raised? If those matters require proof or adjudication, the Forum Selection Clause cannot become dispositive merely by being read in isolation from the remainder of the plaint.

The Illinois Federal Court Proceedings

The subsequent proceedings in ISACA v. DQS Certification India Pvt. Ltd. & Rajendra Khare, Case No. 1:22-CV-0061, before the United States District Court for the Northern District of Illinois, Eastern Division (“NDIL”), provide an important development. ISACA itself instituted proceedings against DQS Certification India and Rajendra Khare before the very federal court identified as the selected foreign judicial forum. On 4 December 2024, the NDIL dismissed ISACA’s Second Amended Complaint for lack of federal subject-matter jurisdiction, holding that the jurisdictional amount required for diversity jurisdiction had not been established. The dismissal was jurisdictional: the federal court could not entertain the action merely because the parties’ contractual arrangement identified it as the selected forum.

The significance of the NDIL judgment must be stated precisely. Its importance is more fundamental: contractual selection of a foreign court does not confer jurisdiction upon that court where jurisdiction does not otherwise exist under the law governing it.

Why the Judgment Requires a More Qualified Reading

The judgment should therefore not be reduced to the broad proposition that exclusive Forum Selection Clause mandates return or rejection of a plaint notwithstanding that part of the cause of action arose within India. The more precise jurisprudential question arising from DQS is therefore whether contractual forum selection can become dispositive before the Court determines a pleaded challenge to the legal availability and enforceability of the selected forum. Party autonomy determines the forum only to the extent that the contractual choice is legally capable of enforcement; it cannot eliminate statutory restrictions, create jurisdiction in a foreign court where none exists, or enlarge the procedural jurisdiction available to an Indian court at the threshold.

Can a Forum Selection Clause Then Be Treated as Supreme?

The larger issue arising from DQS is therefore not whether Forum Selection Clauses deserve judicial respect. They plainly do. The question is whether that principle can be elevated into an absolute rule where the plaint itself pleads that enforcement of the selected forum would leave the Plaintiff without an available legal remedy. A contractual choice of forum ordinarily regulates where a remedy is to be pursued; it assumes an altogether different legal character if, on thecase pleaded, its enforcement determines whether any remedy can be pursued at all.

The law recognises both propositions simultaneously: Forum Selection Clauses are ordinarily to be respected, but their enforcement remains subject to the legal availability of the selected forum and the circumstances recognised by law as sufficient to displace the ordinary rule.

A Forum Selection Clause cannot be treated as supreme merely because it is exclusive. Where the plaint pleads that the selected foreign forum provides no available legal remedy, that enforcement would amount to an absolute restraint prohibited by Section 28 of the Contract Act, and that the relevant foreign law itself requires determination, those issues must precede the decision to hold the parties to their contractual forum. Party autonomy is an important principle of commercial law, but it operates within statutory limits, jurisdictional limits and the procedural framework prescribed by law.

The central question raised by DQS ultimately remains a simple one: If foreign law required proof, if Section 28 qualified the obligation to hold parties to their bargain, if Modi Entertainment recognized circumstances in which a selected foreignforum need not bind the parties, and if the Delhi High Court itself found that it possessed territorial jurisdiction, could those issues be conclusively determined against the Plaintiff at the threshold under Order VII Rules 10 and 11 CPC? That question—not the mere existence of an exclusive Forum Selection Clause—is the issue that deserves closer consideration in understanding the true precedential reach of the judgment.

Author's Disclosure: The author is associated with the Plaintiff in DQS Certification India Pvt. Ltd. v. ISACA Inc. & Ors. The judgment discussed in this article is presently under challenge. The views expressed are a legal analysis of the judgment, pleadings, judicial record and authorities discussed herein.

This article is edited by Yagna Shree Akshara Viswanadha, Associate Editor at FairLex and a law student at National Law University, Delhi.

The author can be contacted at email: rkhare@dqsindia.com