1. Introduction

The Indian Public Sector Undertakings (“PSUs”) have been, and are, the foundational pillars of India’s growing economy, which consistently thrives the infrastructure growth, government spending, creating employment, encouraging social welfare, all of which substantially contributes to the country’s GDP (gross domestic product). Given their expansive commercial and operational footprint, PSUs find themselves entangled in a multitude of transactions, commercial contracts, and high-stake disputes, either before the courts, or specific tribunals, or before mediation or in arbitration. Government litigation accounts for nearly 50% of pending cases in India. In these cases, the focus remains on neutrality, procedural efficiency, and adherence to robust legal standards as the PSUs are subject to enhanced scrutiny vis-à-vis a private party.

1. Handling complex disputes by or against PSUs and relative challenges

PSUs in India operate within a unique legal, operational, and regulatory framework that mandates certain compliances or internal protocols as regards doing business, awarding contracts, floating tenders, dealing with third parties, resolving disputes either through mediation, litigation, or arbitration, etc. Typically, PSUs follow the Administrative Mechanism for Resolution of CPSEs Disputes (“AMRCD”) which requires certain disputes involving government entities to be first addressed through structured inter-ministerial mechanisms.  To ensure that such processes are conclusive and do not lead to protracted litigation between the parties, PSUs approach AMRCD. Additionally, in our experience, the significance of submissions and claim statement cannot be underestimated, because, clearly drafted factual and legal submissions immensely aid in facilitating early resolution.

Recent policy trends have seen a marked shift towards alternative dispute resolution (“ADR”) mechanisms, with a growing emphasis on mediation, especially in public procurement matters. Mediation is now encouraged over arbitration in the interest of expediting settlements, preserving business relationships, and minimizing reputational risks for the PSUs. Having said this, PSUs cannot avoid litigation especially in cases involving public policy, statutory interpretation, or serious allegations such as fraud and corruption. In such scenarios, courts closely scrutinize the PSUs’ actions for compliance along with principles of natural justice, transparency, and non-arbitrariness, reflecting applicability of Part III of the Constitution of India, 1950 (“Constitution”). As ADR framework evolves and internal compliance remains stringent, PSUs must adopt proactive and sophisticated dispute management strategies to balance public interest with commercial pragmatism.

1. Navigating Legal Issues Involving PSUs in Indian Jurisprudence

Navigating disputes involving PSUs, whether initiated by, or against them, surely demands a nuanced appreciation of their legal status, accountability mechanisms, and the evolving    landscape of Indian administrative law.

Legal representation of PSUs provides a wealth of experience in deciphering the intricate statutory frameworks and constitutional principles that govern these entities.  However, recognising that PSUs are classified as ‘State’ under Article 12 of the Constitution, the private party adeptly invokes writ jurisdiction in most cases filed against PSUs to challenge, or defend against allegations of arbitrariness, or violation of fundamental rights, as established in landmark cases such as Rajasthan State Electricity Board v. Mohanlal[1].

“Therefore, these Corporations and Undertakings are subject to Part-III of the Constitution. Consequently, the Supreme Court and the High Courts have power of judicial review under Articles 32 and 226 of the Constitution.”

The Hon’ble Supreme Court in the case of Uflex Ltd. v. State of Tamil Nadu[2] opined that “the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution.”

Often PSUs face such major challenges or hurdles as mentioned below:

• Invoking Arbitration Clause and Challenging its Validity:

PSUs often encounter legal disputes arising from commercial agreements, particularly regarding the invocation and validity of arbitration clauses. In such cases, PSUs can overcome the foregoing challenge by indulging into clearly drafted arbitration clause having all ingredients mentioned explicitly and then following the arbitral process meticulously. A recurring challenge is the limited scope of judicial review under Section 11(6A) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), which restricts the court’s examination to the existence of a valid arbitration agreement and the due invocation of arbitration, without delving into the substantive merits of the dispute. However, even with the limited scope, in certain cases, courts have set aside the arbitration clauses inserted in commercial contracts entered between the PSUs and private parties, for e.g., an arbitration clause providing unilateral appointment of arbitrator by the PSUs. Certain PSU contracts still have such clauses due to which the appointment of arbitrators gets delayed or challenged.  To avoid such delays, the PSUs must draft arbitration clause in accordance with the principles of impartiality and non-bias as stated in the Arbitration Act and the judicial precedents.

• Institutional Arbitration Fee Dispute in PSU Construction Contracts:

PSUs frequently encounter disputes whilst implementing institutional arbitration clauses within commercial contracts, particularly when the arbitration is to be administered by a designated forum such as the SCOPE Forum of Conciliation and Arbitration (“SFCA”). In such case, a common challenge arises when one party fails to comply with procedural requirements, such as the timely deposit of arbitral fees, which is a prerequisite for the appointment of an arbitrator under the forum’s rules. Therefore, PSUs must address the delay caused by non-compliance, as also the legal question of whether applications for arbitrator appointment under Section 11 of the Arbitration Act, are maintainable when the parties have already agreed to institutional arbitration. These procedural disputes can impede the progress of arbitration, compelling the PSUs to seek judicial intervention to ensure adherence to agreed mechanisms and to uphold the integrity of institutional processes. Such situations highlight the operational and legal complexities faced by PSUs in enforcing contractually stipulated dispute resolution procedures, especially when the opposing party’s actions or omissions disrupt the efficient commencement of arbitration proceedings.

• Criminal Liability and Regulatory Challenges in Petroleum Product Transportation by PSUs:

Specifically, PSUs operating in the oil, gas and petroleum sector often face complex legal challenges arising from allegations of pilferage and adulteration during the transportation of petroleum products. Often, in such cases, the PSUs initiate criminal proceedings against the transporters appointed by the PSU, more particularly, when regulatory authorities detain vehicles and seize products for investigation under various statutes. These disputes highlight the operational risks most of the PSUs encounter in managing third-party logistics, the reputational impact of criminal allegations and so on. In such cases, robust monitoring and compliance mechanisms are imperative to prevent and address irregularities in the supply chain, especially, when the transporters challenge such actions before the concerned authorities or in arbitrations, etc.

• Vendor Blacklisting Dispute and Arbitration Clause Enforcement in PSU Contracts:

PSUs frequently encounter disputes arising from the blacklisting of vendors for alleged contractual and operational misconduct. In such instances, a substantial number of vendors challenge blacklisting orders before the writ courts, invoking the Constitution, for alleging procedural lapses or unjust treatment. These types of legal disputes often, inter alia, deal with whether the PSU has followed due process, including issuing a show cause notice and whether it had provided an opportunity for a personal hearing prior to imposing an order for blacklisting and so on.  Based on our experience, in such cases, PSUs need to be careful of procedural diligence in course of enforcing disciplinary measures against vendors.  Moreover, upholding contractual dispute resolution mechanisms is indispensable to defend their (PSUs) actions before the concerned authorities.

• Contractual Disputes and Increased Burden of Proof:

PSUs by their character of being this big, government-backed entities, wielding lots of influence and power also puts them in a disadvantageous position during legal disputes. The PSUs during contractual dispute, often, have a higher burden of proof than their counterparts. Time and again, the Courts have, in cases of contractual disputes involving ambiguity, applied the principle of contra proferentem; essentially, this means that in scenarios of ambiguity the Courts shall decide against the party that has framed the contract.  Often it is the PSUs who may have drafted the contract and or who takes the dominant lead on all the commercial and legal clauses. Moreover, PSUs do come under the umbrella of “State”, and hence, the doctrine of ‘privity of the contract’ gets challenged, which often allows third parties being non-signatories to the contract to sue the PSUs.

• Allegations of Undue Influence And Restrictions During Negotiations:

Referring to the above-mentioned perception of the PSUs, id est the assumption of PSUs being in a superior bargaining position compared to the others, in practicality ends up reducing the negotiating

power of the PSUs. Time and again, cases have been initiated against the PSUs citing undue influence exercised by them under Section 16 and Section 19A of the Indian Contracts Act, 1872. In such a scenario, the onus of proof is on the stronger or larger party to showcase that their conduct is fair and that there was no exercise of any undue influence.  Therefore, during the process of negotiations, the PSUs should be extra cautious and maintain balance, as any terms that are more favourable for the PSUs than the counterparty can be challenged in the court citing undue influence.

• Employment Disputes:

The typical, employment disputes are yet another pressing challenge which often gets overlooked for the PSUs, id est disputes involving personnel issues – whether hiring, firing, promotion, suspension, etc. The purview of service matters also extends to the PSUs on account of being recognised as a ‘State’, and PSUs are governed under various service rules and regulations. Therefore, any decision related to the personnel is susceptible to scrutiny by invoking writ jurisdiction or filing of public interest litigations. Whereas, for private companies, the Courts adjudicate relying on their jurisprudence and the Courts do not interfere with the commercial or operational efficiency invoked by the management of the private company.

• Pressure to Launch and Continue Litigation:

In a lot of instances, the offices of the PSUs have an inherent pressure to file a new litigation case, or to continue with the ongoing case without having any scope for settlement.  Thereafter, often there is an additional pressure to challenge majority of the unfavourable decision of the Court, whether it is meritorious or not. This happens due to various factors like organisational policies, legal policies, reputational risks, performance expectations, fears of disciplinary actions, etc.

• Age-Based Tie-Breaker Policy Challenge in PSU Tender Process:

PSUs frequently face legal challenges to the fairness and constitutionality of their tendering policies, especially when selection criteria—such as age-based preferences in the event of a tie—are alleged to be discriminatory or in violation of Article 14 of the Constitution. In such situations, in our experience, reasonableness and objectivity of their procurement processes is imperative to be proven to ensure balancing of operational efficiency with the need to uphold principles of equality and non-arbitrariness. Accordingly, these necessitate careful alignment of internal policies with constitutional mandates and judicial precedents, while managing the risk of litigation from dissatisfied bidders.

1. Analysis and Conclusion

Handling PSU disputes in India underscores the importance of a multidisciplinary approach, combining legal acumen, procedural expertise, strategic negotiation, and ego management. As PSUs are subject to enhanced scrutiny vis-à-vis private parties, ensuring procedural propriety in internal redressal along with a compliance with evolving principles specified under judicial precedents is imperative to ensure operational efficiency to maintain profitability and increased competition from private players in the market.

This Update has been prepared by Neerav Merchant and Kritika Sethi who can be reached at neerav.merchant@aquilaw.com and kritika.sethi@aquilaw.com respectively. This Update is only for informational purposes and is not intended for solicitation of any work. Nothing in this Update constitutes legal advice and should not be acted upon in any circumstance.

[1] AIR 1967 SC 1857.

[2] (2022) 1 SCC 165.

With the rise of asset tokenization, India is undergoing a transformative shift in its real estate and infrastructure sectors. Leading this evolution is Gujarat International Finance Tec-City (“GIFT City”), which is paving the way for the nation’s first regulated platform dedicated to real estate and infrastructure tokenization. This development represents a critical moment for both India and the global real estate landscape, as tokenization promises to unlock significant new opportunities for investors, developers, and financial institutions.

RWAs can include physical, financial, and intangible assets that exist outside the digital realm but can be tokenized using blockchain technology. These assets include real estate, commodities, equities, bonds, intellectual property, and fine art.

Regulatory Approach towards Tokenization of Real-World Assets (“RWA”)

International Financial Services Centre proposes a regulated framework for public consultation (“Consultation Paper”)[1] for the issuance, custody, and trading of tokenized real-world assets and has sought public consultation on the same. This includes:

• Issuance protocols ensuring compliance with financial regulations.
• Custodial safeguards to protect investor interests.
• Trading, clearing, and settlement mechanisms to facilitate secure transactions.
• Risk Management Framework: The consultation paper emphasizes risk mitigation strategies, covering:
• Cybersecurity and fraud prevention measures.
• Investor protection mechanisms to ensure transparency.
• Regulatory oversight to prevent financial instability.

What is RE tokenisation?

• The Consultation Paper explores the tokenization of RWAs which mainly include real estate assets (“RE Tokenisation”), aiming to enhance liquidity, transparency, and accessibility in property investments.
• RE Tokenization involves digitizing ownership rights of real estate properties using blockchain technology. This allows investors to fractionally own high-value assets, making real estate investments more accessible and tradable.
• Some of the key legal and compliance frameworks that have been proposed for RE Tokenisation, includes:
• Ownership Recognition: Ensuring tokenized real estate assets have legal validity.
• Custody & Trading Mechanisms: Establishing secure platforms for issuance, trading, and settlement.
• Investor Protection: Implementing AML/KYC protocols to prevent fraud and ensure transparency.
• Cross Border Real Estate Transactions: IFSCA’s approach could attract institutional investors, enabling cross-border real estate transactions. By integrating smart contracts, tokenized real estate could facilitate automated rental income distribution and efficient asset management.

Key aspects of the Consultation Paper Asset Categorization and Legal Recognition

The framework aims to define and establish the legal status of tokenized assets, ensuring alignment with existing financial regulations. A clear taxonomy will classify eligible assets, distinguishing between securities, commodities, and other financial instruments to facilitate structured oversight and compliance.

1. Issuance Protocols and Custodial Safeguards

The issuance of tokenized assets necessitates a robust governance structure, incorporating stringent due diligence, issuer accountability, and compliance mechanisms. Custody arrangements must adhere to regulated trust models, ensuring asset security, traceability, and adherence to investor protection mandates.

2. Market Integrity and Transactional Governance

To uphold market fairness, the regulatory framework will implement transaction validation standards, AML/KYC requirements, and real-time monitoring mechanisms. Settlement structures must comply with cross-border regulatory norms, fostering seamless trade execution while mitigating systemic risks.

Way forward

From the proposals and questions posed in the Consultation Paper the following considerations may be made for the purpose of implementing a comprehensive framework for Tokenization:

• Establishing clear taxonomies for tokenised assets aligned with global standards.

One of the main proposals under the consultation paper is the asset classification of tokenised assets. It is interesting to look at the regulatory approach that is taken by other jurisdictions in categorisation of the tokenised assets.

• Regulatory Approach in the USA

In the United States of America, the Securities and Exchange Commission classified tokens based on the economic reality of the arrangement and not the structure of the contract. Even if a token has utility, it may still be a security if marketed or sold as an investment. Exchanges and intermediaries dealing in such tokens must comply with registration and disclosure requirements.

• Regulatory Approach in Singapore

Similarly Monetary Authority of Singapore (MAS) classifies tokenised assets based on their economic function and underlying asset type, rather than their technological form. Accordingly, MAS applies existing financial regulations to tokenised versions of traditional assets.

• Identifying key risks pertaining to Tokens

Implementation of tokenisation under the consultation paper is the implementation of a proper risk management framework. In jurisdictions like Singapore the risk management framework is based on analysis the counterparty risk, market risk and the cybersecurity risks for the tokenised asset. We suggest that a similar approach should be taken when implementing the risk mitigation framework for tokens to be traded in GIFT City.

• Regulatory Sandbox

Certain other considerations may include creating regulatory sandboxes to pilot real-world use cases and collaborating with international regulators to ensure cross-border interoperability.

In conclusion, the IFSCA’s consultation on tokenisation marks a pivotal step in shaping India’s regulatory landscape for digital assets, particularly within the GIFT City. By adopting a principle based and consultative approach, the IFSCA demonstrates a commitment to fostering innovation while safeguarding market integrity and investor interests. The flexibility in asset classification, emphasis on legal recognition of tokenised rights, and openness to stakeholder feedback position for India to build a robust and future-ready tokenisation ecosystem.

Authors:

Smrithi Nair
Partner, Juris Corp

Email: smrithi.nair@juriscorp.in

Kshemya Nair

Associate, Juris Corp

Email: kshemya.nair@juriscorp.in

Disclaimer: 

This article is intended for informational purposes only and does not constitute a legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This article is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial / quasi-judicial authorities may not take a position contrary to the views mentioned herein.

[1]  IFSCA Consultation Paper on Regulatory Approach towards Tokenization of Real-World Assets

La Corte di Appello di Milano ha rigettato l’appello del Consorzio Tutela Aceto Balsamico di Modena a tutela dalla IGP

Milano, 12 maggio 2025 – La Corte di Appello di Milano ha rigettato l’appello promosso da Consorzio Tutela Aceto Balsamico di Modena nei confronti del produttore di un condimento a base di aceto di mele, nonché nei confronti di Esselunga S.p.A. in qualità di distributore del prodotto.

Con questa sentenza, non ancora definitiva, la Corte meneghina ritorna sul tema della tutela delle IGP, chiarendo, inter alia, i limiti di applicazione della disciplina in relazione all’evocazione.

In particolare, la Corte, aderendo ai princìpi consolidati in materia, ha escluso che la tutela della IGP “Aceto Balsamico di Modena” si estenda ai singoli termini non geografici “aceto” e “balsamico” i quali sono liberamente utilizzabili, stabilendo che l’utilizzo del termine “balsamico” nell’etichetta del prodotto PomAgro, in funzione descrittiva del prodotto, non integra la condotta di illecita evocazione di cui all’art. 13 del Regolamento UE n. 1151/12.

Inoltre, quanto alla contestazione di violazione dell’art. 49 L. 238/2016 e di compimento di atti di concorrenza sleale per aver riportato il termine “aceto” sul cartellino segnaprezzo e sullo scontrino d’acquisto, la Corte ha ritenuto che la condotta contestata sia “priva di quella idoneità a danneggiare l’altrui azienda richiesta dall’art. 2598 n. 3 c.c. ai fini dell’integrazione dell’illecito concorrenziale”, evidenziando come il cartellino segnaprezzo svolge “la sola funzione di indicare il prezzo del prodotto” e lo scontrino “viene emesso successivamente al pagamento del prezzo e quindi in un momento materialmente e logicamente posteriore a quello della scelta”.

Esselunga S.p.A. è stata assistita in sede di appello, così come in primo grado, da Elisa Teti e Ottavia Raffaelli, entrambe partner di Rucellai & Raffaelli.

Il team in-house della società è stato coordinato da Alberto Gaudio, General Counsel, e Simona Girimonte, Responsabile Affari Legali.

Rucellai & Raffaelli è uno studio legale indipendente fondato nel 1979 e, da allora, costante punto di riferimento per importanti gruppi industriali e finanziari italiani e multinazionali. Con sedi a Milano, Roma e Bologna, lo studio è attivo in tutte le aree del diritto civile e commerciale e offre una consulenza interamente costruita attorno alle esigenze dell’impresa. www.rucellaieraffaelli.it

Per ulteriori informazioni:

Claudia Galeotti – Comunicazione e marketing

c.galeotti.cons@rucellaieraffelli.it

M.: +39 348 7308289

CoreX Holding B.V. (CoreX), has entered into a share purchase agreement with South32 Limited to acquire 100% of South32’s interest in Cerro Matoso S.A., a vertically integrated nickel laterite open-pit mining and smelting operation located in northern Colombia.

Erdem & Erdem Law Office provided comprehensive legal support to CoreX throughout this transaction. Our team advised on the tender process and negotiated the transaction documents, including the share transfer agreement and the transit services agreement.

CoreX is a global investment group operating across various sectors including metals and mining, ports and terminals, green energy, shipping and logistics, infrastructure and construction, chemicals, international trade, financial investments, and venture capital. The group maintains a strong global presence with operations in 55 countries across five continents and a workforce of over 20,000 employees.

As Erdem & Erdem, we are proud to have supported our client in this significant transaction.

Corex Ports and Terminals Dilovası Liman İşletmeleri A.Ş., a subsidiary of Corex Holding B.V., (CoreX) has successfully executed the share purchase agreement for acquisition of the shares in Polisan Holding Anonim Şirketi.
Erdem & Erdem Law Office is pleased to have provided comprehensive legal support to CoreX throughout this transaction, including conducting legal due diligence and advising on the negotiation of the share purchase agreement.
CoreX is a global investment group operating across ten key sectors including metals and mining, ports and terminals, green energy, shipping and logistics, infrastructure and construction, chemicals, international trade, financial investments, and venture capital. The group maintains a strong global presence with operations in 55 countries across five continents and a workforce of over 20,000 employees.

We are proud to have supported our client in this significant transaction.

In a significant order dated July 11, 2025, the Delhi High Court has granted an interim injunction in favor of Tips Films Limited, restraining 56 websites from unauthorized streaming of the plaintiff’s upcoming films “MAALIK” and “SARBALAJI”.

Tips Films Limited, a listed company and key player in the Indian market and media industry, filed a suit seeking permanent injunction against 56 websites that are engaged in unauthorized streaming of pirated and unlicensed content. The plaintiff apprehended that these websites would stream their exclusive cinematographic works without authorization.

The two films in question are:

• “MAALIK” starring Rajkumar Rao, Manushi Chillar and others, directed by Pulkit, scheduled for theatrical release on July 11, 2025
• “SARBALAJI” starring Ammy Virk, Gippy Grewal and Sargun, directed by Mandeep Kumar, scheduled for theatrical release on July 18, 2025

Hon’ble Mr. Justice Amit Bansal, noting that the majority of the defendant websites are anonymous in nature with incomplete or incorrect information in the public domain regarding their ownership, found that a prima facie case was made out in favor of the plaintiff. The Court also observed that the balance of convenience was in favor of the plaintiff and against the defendants, and that irreparable harm would be caused to the plaintiff if an interim injunction was not granted.

Relying on the decision in UTV Software Communication Ltd. & Anr. v. 1337x.to and Ors. (CS(COMM) 724 of 2017 dated April 10, 2019), the Court issued the following interim directions until the next date of hearing:

1. The 56 defendant websites, their owners, partners, proprietors, officers, servants, employees, and all others acting on their behalf are restrained from communicating, hosting, streaming, and/or making available for viewing and downloading the plaintiff’s works.
2. The Domain Name Registrars (defendants no. 57 to 80) are directed to lock and suspend the domain name registration of the 56 defendant websites.
3. The Domain Name Registrars are directed to disclose complete details of the defendant websites and payment information used for registration.
4. Internet Service Providers (defendants no. 81 to 89) are directed to block access to the 56 defendant websites.
5. The Department of Telecommunications (defendant no. 90) and Ministry of Electronics and Information Technology (defendant no. 91) are directed to issue notifications calling upon various internet and telecom service providers to block access to the rogue websites.
6. If during the pendency of the suit, any further websites are discovered by the plaintiff which are illegally streaming the infringing content, the plaintiff is granted liberty to communicate the details to DoT and MEITY for issuance of blocking orders.
7. If any website which is not primarily an infringing site is blocked pursuant to the order, they shall be permitted to approach the Court by giving an undertaking that they do not intend to engage in any unauthorized streaming of content over which the plaintiff has rights.

Tips Films Limited was represented by counsel Mr. Harsh Kaushik, and the team at ANM Global Ms. Anushree Rauta, Mr. Deepank Singhal, and Mr. Gaurav Dhingra, Advocates.

The case is titled “Tips Films Limited v. Https//0gomovies.com.tr/ & Ors.” (CS(COMM) 690/2025).

This order represents another significant step in the ongoing battle against digital piracy in India, particularly in the context of protecting the rights of content creators in the film industry.

2025-06-17

Laura Čereškaitė-Kinčiuvienė: Notarisation of aircraft transactions is an excessive requirement

Market participants in Lithuania’s aviation sector are currently subject to an excessive legal requirement – the transfer of ownership of an aircraft must be executed in notarised form. AVERUS law firm calls on the relevant institutions to review this outdated practice, which imposes unjustified administrative and financial burdens on the aviation industry.

“Aircraft should not automatically be equated with immovable property. The fact that they are high-value assets should not, in itself, dictate the form of the transfer transaction. This requirement is not applied, for instance, to ships – why, then, is a stricter regime applied to aircraft?” notes Laura Čereškaitė-Kinčiuvienė, Managing Partner at AVERUS and Head of the Aviation Practice.

She highlights that Lithuania’s requirement to notarise aircraft ownership transfer transactions is quite unique, as most other jurisdictions do not impose such a condition.

“In commercial and business aviation, most civil aircraft transactions have a cross-border element. The notarisation requirement leads to unnecessarily high costs and time delays for the parties involved, undermining the competitiveness of our jurisdiction. It also creates an unjustified discrepancy between the treatment of aircraft and ships – the latter can now be transferred under a simple written form, since recent legislative changes reclassified ships as movable property,” said the aviation law expert.

Notary fees for a single aircraft transfer transaction may reach EUR 5,000, given that commercial and business aviation aircraft typically exceed EUR 1 million in value.

Recent Legal Changes Exempt Ships from Notarisation

Under the current Civil Code provisions, aircraft and ships are classified as immovable property, requiring notarised transfer agreements. However, despite this formal equivalence, recent legislative changes have established a different practice for ships.

Amendments to the Law on Merchant Shipping adopted in 2023 reclassified maritime vessels (excluding the LNG storage vessel Independence) as movable property. As a result, notarisation is no longer required for the transfer of registered maritime vessels in Lithuania.

Similar Reforms Needed for Aircraft

According to legal experts, the excessive notarisation requirement for aircraft transactions could be eliminated either by changing current administrative practice or by amending the Aviation Law to explicitly state that aircraft are not to be considered immovable property.

“The Transport Competence Agency should no longer require notarised transfer documents for aircraft registered in Lithuania. Alternatively, the Aviation Law should be amended to specify that civil aircraft are not considered immovable property, unless otherwise provided by law. This would bring clarity and regulatory parity between aircraft and maritime vessels,” adds Laura Čereškaitė-Kinčiuvienė.

AVERUS invites relevant institutions and the legal community to engage in a dialogue on the need to modernise the regulatory framework and strengthen Lithuania’s position as a competitive jurisdiction for aviation.

About AVERUS

AVERUS is a business law firm with offices in Vilnius and Klaipėda. Since 2014, the international legal directory Legal 500 has recognised AVERUS as one of the leading law firms in Lithuania in aviation, shipping and transport, and dispute resolution.

Daugiau informacijos

Laura Čereškaitė-Kinčiuvienė

Vadovaujančioji AVERUS partnerė, advokatė

Mob.: +370 684 06452

El. paštas: laura.cereskaite@averus.lt

This amendment primarily aims to align the SEBI norms for SDIs with that of the RBI SSA Directions which only applies in case of securitisation transaction undertaken by RBI regulated entities.

The process of securitization enables the monetization of illiquid assets by converting them into marketable securities, thereby providing an alternative source of funding for asset originators. SDIs provides access to these originators to the capital markets, facilitating broader investor participation. Recent market analysis reveals a growing trend among not only banks and financial institutions but a lot of corporates and businesses (including start-ups) have opted SDIs as a mode to procure financing. The evolution of the securitization market has moved beyond securitization of traditional loan receivables by non-banking finance companies (“NBFCs”) to encompass emerging asset classes such as trade and lease rental receivables, prompting a need to revamp the regulatory framework.

2) ANALYSIS
(a) Modification in the definitions of Debt / Receivables
SEBI has specifically and exclusively included mortgage debt, debt permitted pursuant to RBI SSA Directions, listed debt securities, trade / rental / equipment leasing receivables and financial asset as defined under SARFAESI Act from the definition of debt. This definition seems to be quite restrictive in scope, while the intent is to align the SDI Regulations with the RBI’s SSA Directions and safeguard investor interests, the exclusion of certain asset classes and receivables from the ambit of listed securitisation may inadvertently withhold innovation and access to securitisation as a viable funding route.

While investor protection is critical, the exclusion of certain asset classes from securitization under the SDI Regulations may have an adverse effect of curbing market development and limiting access to the market as it hampers securitisation as an instrument, constrains innovation and undermines the development of a diversified securitization market.

Instead of excluding certain sectors and types of receivables from the scope of listed securitisation, SEBI may consider establishing higher thresholds for disclosures and due diligence, such as by introducing a minimum credit rating requirement for specific categories of transactions, mandating the involvement of SEBI-registered intermediaries, or prescribing minimum thresholds for anchor investor participation.

(b) Ticket Size
SDIs to have a minimum ticket size of INR 1,00,00,000/- (Indian Rupees One Crore Only) only for RBI regulated entities at initial subscription, and for non-RBI regulated entities at both initial subscription and subsequent transfers. Minimum ticket size for SDIs backed by listed securities shall be the highest face value among such underlying listed securities. When an SDI is secured by non-convertible debentures with a face value of INR 1,00,000/- (Indian Rupees One Lakh Only), then the similar face value can be assigned to the SDIs as well.

The purpose of this amendment was to ensure that a complex instrument like SDI is accessible only to investors capable of understanding its complexity. Consequently, retail investor participation in the primary market may decline, limiting their access to the secondary market, provided the originator is regulated by the RBI.

(c) Minimum Risk Retention (“MRR”)
SEBI has mandated to align the MRR requirement with that as provided in the RBI SSA Directions. SEBI has specifically stated that the originators must maintain MRR of 10% in case residual maturity is more than 24 months, however where receivables have a residual maturity of up to 24 months, the originator must maintain MRR of 5%.

In its recent efforts to align the MRR framework with that prescribed by the RBI, SEBI appears to have overlooked securitisation transactions undertaken by entities that do not fall under the regulatory purview of the RBI but are nonetheless involved in listed transactions. This oversight may inadvertently create regulatory inconsistencies and practical challenges for such entities.

It is imperative that SEBI considers recognising the distinct nature of securitisation transactions by non-RBI regulated originators, particularly with respect to the manner in which MRR is maintained. For instance, in asset lease rental securitisations, the underlying asset typically remains under the ownership of the originator throughout the tenure of the transaction. In certain cases, the asset may also be secured by the originator, thereby reinforcing the originator’s continuing economic interest in the transaction.

Therefore, SEBI could have taken a more nuanced approach to MRR compliance, one that recognises the economic interest retained by originators in various forms. Such an approach would have aligned regulatory expectations with prevailing market practices, while also promoting a more equitable and practical implementation of securitisation norms.

(d) Minimum Holding Period (“MHP”)
SEBI has aligned the MHP conditions as prescribed under the RBI SSA Directions for all RBI regulated entities. Accordingly, there is no additional compliance requirement for RBI regulated entities. The special purpose distinct entity shall ensure that the securitisation by the originator is done only after completion of a prescribed MHP. This is aimed at strengthening risk retention by requiring originators to hold loans for a minimum period before transferring them, thus aligning their interests with investors.

The minimum holding period requirement is of 3 months in case of loans with tenor of up to 2 years; and 6 months in case of loans with tenor of more than 2 years.

(e) Track Record and Operational Experience Requirements
SEBI has mandated that the obligors and originators must necessarily have a track record of operations of 3 financial years which resulted in the creation of the type of debt or receivables that the originator is seeking to securitize.

SEBI has specifically stated that the condition for maintenance of track record of 3 years for originators and obligors will not be applicable in case of transactions where the originator is an RBI regulated entity. This move by SEBI is in accordance with the RBI SSA Directions, where there is no such requirement of 3 years track record of operations or a lending relationship.

For non-RBI regulated entities, the interpretation of debt or receivables differs significantly. Such entities typically engage in the securitization of lease rental receivables, trade receivables, and warehousing receivables, rather than traditional loans and advances. In these cases, the obligors are generally businesses or corporates, in contrast to RBI-regulated entities. In such circumstances, there are greater complexity for both obligors and originators, particularly when considering the associated costs, compliance requirements, and liabilities related to the issuance of SDIs. Furthermore, factors such as the operational track record cannot reliably serve as an indicator for assessing or predicting the performance of the pool of assets.

This move by SEBI might lead to market participants rather opt for other financing options like direct assignment, securitization by issue of unlisted instruments, traditional methods of fund raising etc.

(f) Limitation on exposure of Obligor
SEBI has mandated that no single obligor i.e., the party responsible for repaying the debt shall contribute more than 25% (twenty-five percent) to the overall asset pool, however this provision is not in line with the RBI SSA Directions which expressly permits single asset securitization.

Additionally, the essence of securitisation lies in redistribution of risks. In cases of huge and concentrated asset pools, securitisation will serve as a tool to redistribute risk. Depriving the market of single asset securitisation or highly concentrated asset securitisation will lack in serving the purpose of redistribution of risk.

(g) Mandatory Periodic Disclosure Requirement
The originator must mandatorily furnish performance reports of the underlying asset pool to the trustee at least on a quarterly basis. In addition, the originator must submit a certificate from its auditor certifying the accuracy of the disclosures made about the assigned asset pool, on a quarterly basis. This provision enhances transparency and ongoing oversight of securitised assets, thereby strengthening investor confidence.

(h) Dematerialization
One of the crucial amendments is the mandate to issue SDIs in dematerialized form only. This amendment comes in response to the growing need for greater transparency and reduction in the operational risks associated with physical securities.

This will eventually help in better monitoring and tracking of SDI ownership. As the entire process becomes electronic, it would be easier for regulators to track ownership changes and prevent fraudulent activities. This amendment directly supports the mandatory dematerialisation requirement of the government and the notification issued by the ministry of corporate affairs that is encouraging dematerialisation of securities.

(i) Clean up Call Option
The provisions for the exercise of the clean up call option has been aligned with those prescribed under the RBI SSA Directions. These provisions have been introduced under the chapter applicable in case of public offer of SDIs.

Although the provisions for the exercise of clean up call options has been made a part of chapter applicable in case of public offers, it should however be noted that these provisions are also a part of the RBI SSA Directions. Accordingly, financial sector originators are bound by such conditions even if they go for private placement of SDIs.

3) KEY TAKEAWAYS
The recent regulatory changes introduced by SEBI to govern SDIs represent a comprehensive shift toward increasing transparency, improving risk management, and aligning the SDI Regulations with the RBI SSA Directions. These amendments build upon the proposals set forth in the consultation paper released by SEBI in November 2024.

The amendment reflects a measured and balanced regulatory approach as it neither promotes nor restricts securitisation in a disproportionately favourable or unfavourable manner, rather it adopts a neutral stance seeking to bridge regulatory gaps without undermining the market’s capacity for innovation and growth, except in certain instances that we discussed above.

By incorporating certain feedback from stakeholders and aligning with the RBI SSA Directions, SEBI has strengthened the regulatory framework for SDIs. However, the attractiveness of SDIs as an investment vehicle can be boosted in case the issues highlighted above are also addressed by the regulators.

The most impactful and potentially controversial amendment is the imposition of a minimum ticket size of INR 1,00,00,000/- (Indian Rupees One Crore Only), aimed at restricting participation in SDIs to institutional and sophisticated investors. While this enhances the regulatory oversight and potentially reduces the risk exposure of uninformed retail investors, it also sidelines a segment that has historically contributed to market depth and liquidity. It also dilutes the essence of listed space if retail investors are not welcomed. Retail investors, though more vulnerable, have played a role in expanding the base of capital in securitised products.

The track record and operational experience requirements aim to ensure that only well-established entities with proven expertise are allowed to securitise their receivables. While this can reduce credit and operational risks, it may also restrict innovation and access to securitisation as a viable funding route for newer firms.

SEBI is responsible to make India’s securitisation market more robust, transparent, and institutionally driven. While these reforms enhance regulatory integrity, we hope SEBI does not inadvertently withhold participation, innovation, or access to the securitization market.
Authors:

Apurva Kanvinde
Partner, Juris Corp
Email: apurva.kanvinde@juriscorp.in

Smit Parekh
Senior Associate, Juris Corp
Email: smit.parekh@juriscorp.in

Harshit Khandelwal
Associate, Juris Corp
Email: harshit.khandelwal@juriscorp.in

Disclaimer:
This article is intended for informational purposes only and does not constitute a legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This article is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial / quasi-judicial authorities may not take a position contrary to the views mentioned herein.

With the rise of asset tokenization, India is undergoing a transformative shift in its real estate and infrastructure sectors. Leading this evolution is Gujarat International Finance Tec-City (“GIFT City”), which is paving the way for the nation’s first regulated platform dedicated to real estate and infrastructure tokenization. This development represents a critical moment for both India and the global real estate landscape, as tokenization promises to unlock significant new opportunities for investors, developers, and financial institutions.

RWAs can include physical, financial, and intangible assets that exist outside the digital realm but can be tokenized using blockchain technology. These assets include real estate, commodities, equities, bonds, intellectual property, and fine art.

Regulatory Approach towards Tokenization of Real-World Assets (“RWA”)

International Financial Services Centre proposes a regulated framework for public consultation (“Consultation Paper”) for the issuance, custody, and trading of tokenized real-world assets and has sought public consultation on the same. This includes:

1) Issuance protocols ensuring compliance with financial regulations.

2) Custodial safeguards to protect investor interests.

3) Trading, clearing, and settlement mechanisms to facilitate secure transactions.

4) Risk Management Framework: The consultation paper emphasizes risk mitigation strategies, covering:

(a) Cybersecurity and fraud prevention measures.

(b) Investor protection mechanisms to ensure transparency.

(c) Regulatory oversight to prevent financial instability.

What is RE tokenisation?

1) The Consultation Paper explores the tokenization of RWAs which mainly include real estate assets (“RE Tokenisation”), aiming to enhance liquidity, transparency, and accessibility in property investments.

2) RE Tokenization involves digitizing ownership rights of real estate properties using blockchain technology. This allows investors to fractionally own high-value assets, making real estate investments more accessible and tradable.

3) Some of the key legal and compliance frameworks that have been proposed for RE Tokenisation, includes:

(a) Ownership Recognition: Ensuring tokenized real estate assets have legal validity.

(b) Custody & Trading Mechanisms: Establishing secure platforms for issuance, trading, and settlement.

(c) Investor Protection: Implementing AML/KYC protocols to prevent fraud and ensure transparency.

(d) Cross Border Real Estate Transactions: IFSCA’s approach could attract institutional investors, enabling cross-border real estate transactions. By integrating smart contracts, tokenized real estate could facilitate automated rental income distribution and efficient asset management.

Key aspects of the Consultation Paper Asset Categorization and Legal Recognition

The framework aims to define and establish the legal status of tokenized assets, ensuring alignment with existing financial regulations. A clear taxonomy will classify eligible assets, distinguishing between securities, commodities, and other financial instruments to facilitate structured oversight and compliance.

1. Issuance Protocols and Custodial Safeguards

The issuance of tokenized assets necessitates a robust governance structure, incorporating stringent due diligence, issuer accountability, and compliance mechanisms. Custody arrangements must adhere to regulated trust models, ensuring asset security, traceability, and adherence to investor protection mandates.

2. Market Integrity and Transactional Governance

To uphold market fairness, the regulatory framework will implement transaction validation standards, AML/KYC requirements, and real-time monitoring mechanisms. Settlement structures must comply with cross-border regulatory norms, fostering seamless trade execution while mitigating systemic risks.

Way forward
From the proposals and questions posed in the Consultation Paper the following considerations may be made for the purpose of implementing a comprehensive framework for Tokenization:

1) Establishing clear taxonomies for tokenised assets aligned with global standards.

One of the main proposals under the consultation paper is the asset classification of tokenised assets. It is interesting to look at the regulatory approach that is taken by other jurisdictions in categorisation of the tokenised assets.

(a) Regulatory Approach in the USA

In the United States of America, the Securities and Exchange Commission classified tokens based on the economic reality of the arrangement and not the structure of the contract. Even if a token has utility, it may still be a security if marketed or sold as an investment. Exchanges and intermediaries dealing in such tokens must comply with registration and disclosure requirements.

(b) Regulatory Approach in Singapore

Similarly Monetary Authority of Singapore (MAS) classifies tokenised assets based on their economic function and underlying asset type, rather than their technological form. Accordingly, MAS applies existing financial regulations to tokenised versions of traditional assets.

2) Identifying key risks pertaining to Tokens

Implementation of tokenisation under the consultation paper is the implementation of a proper risk management framework. In jurisdictions like Singapore the risk management framework is based on analysis the counterparty risk, market risk and the cybersecurity risks for the tokenised asset. We suggest that a similar approach should be taken when implementing the risk mitigation framework for tokens to be traded in GIFT City.

3) Regulatory Sandbox

Certain other considerations may include creating regulatory sandboxes to pilot real-world use cases and collaborating with international regulators to ensure cross-border interoperability.
In conclusion, the IFSCA’s consultation on tokenisation marks a pivotal step in shaping India’s regulatory landscape for digital assets, particularly within the GIFT City. By adopting a principle based and consultative approach, the IFSCA demonstrates a commitment to fostering innovation while safeguarding market integrity and investor interests. The flexibility in asset classification, emphasis on legal recognition of tokenised rights, and openness to stakeholder feedback position for India to build a robust and future-ready tokenisation ecosystem.

Authors:
Smrithi Nair
Partner, Juris Corp
Email: smrithi.nair@juriscorp.in

Kshemya Nair
Associate, Juris Corp
Email: kshemya.nair@juriscorp.in

Disclaimer:
This article is intended for informational purposes only and does not constitute a legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This article is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial / quasi-judicial authorities may not take a position contrary to the views mentioned herein.

The project includes the procurement of 250 fully electric buses and the installation of over 100 high-performance charging points, which are to be powered entirely by certified green electricity. The aim is to serve the key transport routes in eastern and western Rome with a zero-emission fleet in future. The project is financed via a Fleet-as-a-Service model, with the Italian export credit agency SACE providing a guarantee to secure the financing.
A team led by Munich partner Timo Bernau advised BayernLB on all aspects of capital markets law relating to the complex financing structure.

Advisers of BayernLB at GSK Stockmann:
Dr Timo Bernau (lead), Dr Martin Freytag (both banking and finance law)

Contact:
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timo.bernau@gsk.de

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