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This article is written by Shivani Garg, pursuing a Diploma in International Business Law from LawSikho.

Introduction

Have you ever believed in destiny? Especially, some kind of accident where you were at the wrong place at the wrong time but that accident changed your life forever in a very good way. Something or someone you never expected to meet and next you know is, that what you have been waiting to happen in your life. That’s what I call destiny, you know some stories are always meant to be, it’s just that you don’t be the one writing that story for you. Let the time take its course! Well, that’s exactly what happened with the two great designers Sabyasachi Mukherjee, an Indian fashion designer, and Christian Louboutin, a French Egyptian fashion designer known for ‘The Red Sole.’ The only thought that comes to my mind when I picture their collection together is “The Match Made in Heaven.’ 

It all began with an accidental meet at one of the stores in Mumbai and then their very first collaboration took place at the brand’s flagship boutique in Kala Ghoda that culminated with the season’s Amazon India Couture Week (AICW) – ‘Bater’ by Sabyasachi in 2015. The inspiration of the collection in the Batter was Indian hunting birds for which the beautiful silhouettes and motifs collection by Christian blended it perfectly, taking the theme to the entire next level. Well, the 80 pairs that were designed for the runway were dedicatedly hand-embroidered Parisian footwear complementing Indian baroque, striking a perfect balance. Sabyasachi describes its collection as, “Words that come into my mind to describe the collection are – dark, dangerous, and predatory. It is sexual. The historical references came from the royal hunts, which were channelized into shredded, burnt and layered textures.” Soon after that, in 2016, they collaborated on handbags for Sabyasachi’s collection. Well, their third collaboration in 2017 brought every other eye-popping out. The designers created a new style for the wedding season – The Perfect Wedding Shoes by Sabyasachi and Christain. The entire collection is a collaboration of Indian wedding wear with a European touch in the footwear for both bride and groom. Let me tell you, it’s the major #wedding goal for any girl out there. Guilty not charged. Well, the very reason behind their chemistry working was the intent behind their own work by creating the reflection of their soul and creating the masterpiece of its kind. And there is one more thing behind their designs that followed – from whom those designs were created and how they want them to feel about it. That’s all said, this was what you can find broadly in any news/magazine article so I thought why not make an interesting twist and tell you about things that would never be covered on a broad aspect. Well, if you haven’t guessed it until now, let me tell you we will be talking about FDI, taxes, IP, and license distribution. Since we are talking about international collaboration and partnership, we can’t forget about the rules and regulations abiding by the artwork that follows and definitely not the compliance between Indian and UK, Sabyasachi had to meet to make the creative magic of India couture mixed with a European touch. That’s the story we should know as well or to the very least applicable for anyone when it comes to international collaboration.

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FDI regime

You must be aware of the investment plans when it comes to expanding your business at an international level as that would come to you as a disaster or a blessing. Luckily, things work well for the Sabyasachi-Christain partnership as RBI has introduced Single Brand Retail Trading in 2011. What is single-brand retail trading? – It is the medium through which a retail store involving foreign investment may sell only a single brand. It only covers products that are branded during manufacturing. Also, products should be sold under the same brand in one or more countries other than India. All you need to know about this FDI investment is that the FDI cap on the single-brand retail trading is set at 100% through the automatic route. Wondering, how is that relevant to this collaboration? Well, all due to this investment regime Sabyasachi or Christain Louboutin didn’t look for prior permission or approval from RBI to carry forward their partnership plans. Certainly, the partnership fulfilled all the conditions that come along with single-brand retail trading by FDI. That’s a huge relief, I must say. Next, there comes the IP of the product which certainly can’t be missed at any cost.

Intellectual Property for international collaborations

Well, our fashion industry faces too many problems when it comes to intellectual property claims. India, being the country where culture and diversity are deep-rooted, is nevertheless the largest inspirational ground when it comes to fashion and as a result, many global brands wish to set their foot to take their work to the next level by collaborating with top designers here. It becomes the highest concern to protect the outcomes of a person’s intellect. And when it comes to Louboutin, he is already in the news most of the time for his claims related to the intellectual property of his work. It is quite evident that two designers never let go of things easily when it comes to their work and profits. So, what protection is available to designers? Heartbreaking news is that one cannot claim the protection of his design under the Copyright Act as well as the Design Act in India. But the protection will be granted both in India as well as in the UK. It’s beneficial to get protection in both the countries so mutual interests are protected from the end of both parties and it doesn’t leave any room for third parties to take benefits. It is possible to seek protection in both the countries as India has already signed various treaties like the Paris Convention, the Madrid Protocol, and the Patent Cooperation Treaty in which the UK is a signatory party as well. Since the scope of IP protection is narrow for the fashion industry, the internet sensation ‘Diet Sabya’ has taken over the IG where the page calls out the plagiarized fashion design works by comparing it on a side-to-side basis, basically trying to save the drowning boat of designers. With the IP sorted, we will see what kind of partnership options are available in the current scenario.

Partnership regulations

When it comes to the UK, you have few decent options available for partnerships like a general partnership, LP, and LLP. In the current arrangement, it will be a general partnership that is governed by the Partnership Act 1890. Simply, because it is just two people coming together to carry on a business together. Accordingly, the terms and conditions will be laid down in writing to make it a legal document. Apart from that, a partnership must be registered with HMRC.

Tax laws applicable

For every benefit you make, tax is a mandatory thing to be paid to the government, it doesn’t really matter whether profits are made on Indian land or foreign land. It’s too much of a hassle to give the percentage of your hard work to the government, let alone twice. It’s always good to know whether DTAA (Double Taxation Avoidance Agreement) is applicable to the countries or not. Only if countries are into such an agreement, not only the profit is saved but benefits can be available as well. DTAA is a pact between two countries with an objective to avoid taxation of the same income in both countries. The great part about the deal is – India has comprehensive DTAA with over 80 countries including the UK. So as per the provisions of DTAA, both Sachyasachi and Christian Louboutin must have benefited from this agreement.

Requisite of a distribution license

Well, when it comes to commercial things certain targets are kept in mind when drafting the contract which relates to the product as to where to make it available. Yes, things are figured out beforehand with respect to the distribution of the product which was also in the present scenario. There is no doubt that the entire collection was made keeping in mind the global consumer. You will be surprised to know all the products of collaboration are only available in Christian Louboutin stores in Delhi, Mumbai, and internationally as well. The interesting part about this deal is that the limited edition collection is exclusively available at a few stores. From the grand launch which was exclusive as well in Harrods, London to making it available at exclusive stores in New York at Bergdorf Goodman and L.A. at Just One Eye boutique. The interesting part about the agreement is that products are made available at the discretion of Christian Louboutin. Yes, it means you can’t find the collection of any of the Sabyasachi Outlets. Although this kind of information is not something spoken out loud if we do due diligence then it’s pretty much evident. Well, pretty much a sensible thought to make it travel internationally.

Conclusion

The work ideas of two fashion gods are no less than any royal affair ever seen before. They are surely leaving the legacy behind. From bringing out the bold expressions with couture to creating fairy tale wedding goals, it’s less than an epic event that ever happened. And with their fourth collection which is a beautiful amalgamation of Indian and Parisian style craftsmanship is something to die for. The Sabyasachi × Christian Louboutin collaboration is exactly what dreams are made of. Since then it was an international collaboration so Sabyasachi has to go along with few obligations to make it overseas at the grand scale and that too with another renowned designer all over the world. Even though the designers admit they didn’t come up with the contract initially but we all know business never goes without that. Although the entire details are not in the public domain, few things can be deduced while looking deeply into it, just the way they have been pointed out. Nevertheless, no matter what kind of collaboration it is, the legality can’t be missed. In the end, everyone likes their interests to be protected well.

References

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