Mumbai High Court has held that the Indian government cannot ban exports of any product with retrospective effect.

In particular, the court also found that such bans should not be applied to contracts concluded in which letters of credit (L/Cs) were opened prior to the imposition of the ban.

Milk exports

The court order immediately gave the green light for a private company to export milk powder.

The case resulted from a suit filed by Parag Milk Foods Pvt Ltd, which challenged a February 2011 government notification banning all exports of milk products.

The ban was introduced to prevent shortages and price hikes in the domestic milk products market.

Retrospective ban

Parag's lawyers argued that they were not challenging the ban on exports of milk powder in principle, but questioning the legitimacy of the government's right to impose it retrospectively.

They also successfully argued that export bans should certainly not be imposed when a company had already entered into a contract and opened a L/C with a foreign buyer.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.