The Law Ministry has cautioned the government that certain clauses in the draft inter- governmental agreement, including the one on material breach, signed for the purchase of 36 French Rafale fighter aircraft 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.
India and France had on January 25 inked the inter- governmental agreement on the sale of 36 French Rafale fighter jets but were unable to sign the final deal due to "financial" issues.
This agreement was among the 14 pacts signed between the two countries after extensive talks between Prime Minister Narendra Modi and visiting French President Francois Hollande.
"Leaving out financial aspect, India and France have signed inter-governmental agreement on purchase of 36 Rafale fighter jets. We expect that even the financial aspects pertaining to purchase of Rafale jets will be resolved as soon as possible," Modi had said at a joint press event with Hollande.
The two countries are negotiating a deal for 36 Rafale fighter jets in fly-away condition since the announcement for the same was made by Modi in April last year during his visit to France.
However, the final deal is yet to be sealed as the two sides are still negotiating the price which is estimated to be about Rs 60,000 crore.
