Scorpene pact not clear on data theft or espionage

NEW DELHI: India can invoke a non-disclosure clause that was signed as part of the Scorpene submarine contract in 2005 for action against French manufacturer DCNS but the pact is not clear on penal action in case of data theft or espionage.

While technically, the clause could be invoked and guarantees to the tune of Rs 1800 crore be frozen, such an action would face a strong legal challenge, given that the contract specifies that the company should not disclose any information to a third party.

Senior naval officers and analysts that ET spoke with said that the case is complicated by the fact that the data leakage is not deliberate but appears to be a case of theft, making it difficult to pin the blame only on the vendor.

"Frankly, we have never come across such a situation before. The standard pact does not cater for such a situation and we are trying to find out what provisions have been violated by the leak. We are treading new water and in this case the company is claiming to be the victim of a crime," a senior Naval officer told ET.

Article 25 of the 2005 procurement policy – the Scorpene deal was signed when this policy was in effect - specifics that the vendor cannot disclose any 'specification, plan, design pattern' of information to any third party. It however is silent on the vendor’s responsibilities to safeguard data.

As per the 2005 policy, the vendor is required to deposit a 10 per cent performance and warranty bond that can be enchased in case of a violation of the contract. This however would be contested under the arbitration laws in the contract.