Delhi High Court Rejects Suit, Upholds Exclusive Foreign Jurisdiction Clause in CMMI Licensing Dispute

New Delhi: The High Court of Delhi, in a significant ruling on March 26, 2025, allowed an application for the rejection of a plaint filed by DQS Certification India Pvt. Ltd. against ISACA Inc., a US-based organization. Hon'ble Mr. Justice Purushaindra KumarKaurav held that an exclusive jurisdiction clause in their License Agreement, granting authority to courts in Illinois , USA, ousts the jurisdiction of Indian courts, even if a part of the cause of action arose in India. The plaint was consequently rejected under Order VII Rule 11 of the Code of Civil Procedure (CPC).

Case Background: A Licensing Agreement Gone Sour

The dispute originated from a License Agreement dated October 12, 2020, between DQS Certification India Pvt. Ltd. (Plaintiff) and ISACA Inc. (Defendant No.1). ISACA, an Illinois -based non-profit, owns the Capability Maturity Model Integration (CMMI), a globally recognized standard for process improvement. DQS India was licensed to conduct CMMI appraisals.

On August 30, 2021, ISACA issued a termination notice to DQS India, citing deficiencies in services. After an unsuccessful attempt by DQS India to invoke arbitration, ISACA maintained that any challenge to the termination must be litigated in the United States District Court for the Northern District of Illinois (USDC Illinois ), as per their agreement. DQS India subsequently filed the present suit in the Delhi High Court seeking a mandatory injunction to restore the status quo prior to the termination.

Arguments from Both Sides

ISACA Inc. (Defendant No.1) , represented by Mr. Anuj Berry , argued for the rejection of the plaint on two main grounds:

1. Lack of Jurisdiction: Clause 12.2 of the License Agreement expressly ousts the jurisdiction of any court except those in Cook County, Illinois , USA.

2. Forum Non Conveniens: The USDC Illinois is the more appropriate forum, as the governing law is Illinois law, and the agreement stipulates dispute resolution there. They contended that no material part of the cause of action arose within the Delhi High Court's jurisdiction.

DQS Certification India Pvt. Ltd. , with its representative Mr. Rajendra Khare appearing in person, opposed the application, asserting:

1. Territorial Jurisdiction: The Delhi High Court had jurisdiction because the plaintiff is located in Delhi, the agreement was signed in Delhi, the termination notice was received in Delhi, and ISACA has a significant business presence and activities in India (franchisees, certifications, members).

2. Unfair Clause: The jurisdiction clause was part of a prejudicially tilted agreement, broad, ambiguous, and that DQS India faced difficulties in suing in the US, allegedly being barred by Illinois state law without state permission.

3. Cause of Action: A part of the cause of action, including the impact of termination, arose in Delhi.

Court's Reasoning: Sanctity of Contractual Choice of Forum

Justice Kaurav first examined whether the Delhi High Court had jurisdiction under Section 20(c) of the CPC, which allows suits where the cause of action, wholly or in part, arises. The Court acknowledged:

> "Admittedly, in the present case, defendant No.1 does not reside in Delhi. However, looking at the nature of the License Agreement, the plaintiff can issue certification to companies all around the world, thus, the effect of the License Agreement is felt within the territorial jurisdiction of this Court. Furthermore, the plaintiff resides in Delhi and the License Agreement was signed and executed in Delhi. Moreover, the effect of the impugned Termination Notice was also felt in Delhi... Therefore, by looking at the averments in the plaint and as per Section 20(c) CPC, a part of the cause of action arises within the territorial jurisdiction of this Court, thus, this Court has jurisdiction to entertain the suit." (Para 22, 23)

Despite finding initial jurisdiction, the central question became whether Clause 12.2 of the License Agreement ousted this jurisdiction. Clause 12.2 stipulated that the agreement is governed by Illinois law and disputes would be settled either by arbitration in Cook County, Illinois (at ISACA's election) or:

> "...exclusively in the United States District Court for the Northern District of Illinois or, if such Court does not have jurisdiction, in any Court of general jurisdiction in Cook County, Illinois and each party consents to the exclusive jurisdiction of any such Courts and waives any objection which such party may have to the laying of venue in any such Courts." (As quoted in Para 38)

The Court relied on a series of Supreme Court precedents, including Hakam Singh v. Gammon (India) Ltd. , A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem , and Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd. , which establish that parties can, by agreement, confer exclusive jurisdiction on one of several competent courts, and such clauses are not contrary to public policy or Section 28 of the Indian Contract Act, 1872.

The Court emphasized the use of the word "exclusively" in Clause 12.2:

> "The use of definitive terms such as “exclusively” in the jurisdiction clause further fortifies the parties‟ unequivocal intention to submit to the authority of the foreign Court, leaving no room for ambiguity or residual jurisdiction before this Court." (Para 41)

Further, referencing Modi Entertainment Network v. W.S.G. Cricket Pvt. Ltd. , the Court noted that deviation from a mutually agreed forum is permissible only in exceptional circumstances to prevent injustice, which the plaintiff failed to demonstrate.

> "In the present case, the plaintiff is not able to show any convincing contingencies that prevent it from ventilating its grievances before a mutually agreed forum; rather no concrete steps were even taken by the plaintiff to approach the mutually agreed forum. Mere complexity of the procedure in a foreign country or inconvenience of the parties on that count cannot ipso facto be the made the sole basis to disturb the mutual intention of the parties..." (Para 43)

Final Decision: Plaint Rejected

Applying the principles of Order VII Rule 11 CPC, which allows for rejection of a plaint if barred by any law, the Court concluded:

> "...juxtaposing the legal position with regard to the principle of “exclusive jurisdiction” as laid down in the judicial pronouncements of the Supreme Court with the principles of Order VII Rule 11 CPC, it would establish that the mutual conferment of jurisdiction to a Courts of Illinois explicitly ousts the jurisdiction of this Court to adjudicate the lis between the contesting parties." (Para 46)

Consequently, the application (I.A.2120/2022) filed by ISACA Inc. was allowed, and the plaint filed by DQS Certification India Pvt. Ltd. was rejected.

This judgment reinforces the importance of party autonomy in commercial contracts and the binding nature of exclusive jurisdiction clauses, even when dealing with international agreements where a part of the cause of action might arise domestically.