US Requests WTO Panel in Poultry Dispute with India

According to a USTR press release, the US is pressing ahead with a request for the establishment of a panel in DS430 to decide upon US claims “regarding the Government of India’s restrictions on imports of various U.S. agricultural products, including poultry meat and chicken eggs.” (I have discussed the dispute and the request for consultation previously.)

Although the panel request is not yet up on the WTO website, the USTR press release provides the following background:

India is asserting it has the right to impose import restrictions on countries whenever they report outbreaks of low pathogenic avian influenza (LPAI), the only kind of avian influenza found in the United States since 2004. The relevant international guidelines as well as the relevant science do not support the imposition of measures of the type India is maintaining on account of LPAI.

[...] India appears to have acted inconsistently with its obligations under the SPS Agreement, including by failing to base its measures on international guidelines or a valid risk assessment and by failing to ensure that its measures do not unfairly discriminate against imports from countries such as the United States.

Benn McGrady offers some thoughts on this development over on the O’Neill Institute Blog.  Referring to the other dispute recently initiated by India against the US over CVDs on certain steel products from India, McGrady notes, that “[t]his consultation [CVD] was initiated by India shortly after the consultation concerning agricultural imports was initiated by the US, suggesting something of a tit-for-tat claim and counterclaim dynamic”. In fact, recent reports continue to suggest that India could soon file another dispute against the US over certain visa fees imposed by the latter, which would only further the perception of such a dynamic at work between the two countries. McGrady also makes a reference to India’s protest against the US placing it on the “Priority Watch List” in the US Special 301 Report (Recall also the voices of protest against India’s first compulsory license issued earlier this year). As of now, such a reactionary dynamic seems to be confined to the realm of WTO disputes, however, it will be interesting to see if it ends up defining India-US economic relations in other areas (such as the proposed bilateral investment treaty, for example).

Korean Professor Appointed to WTO Appellate Body

According to latest reports, Prof. Seung Wha Chang, a professor of law at Seoul National University, has been appointed as a member of the WTO Appellate Body. Prof. Chang will fill in the vacancy arising out of the resignation of Mr. Shotaro Oshima, a Japanese national and diplomat who resigned from the AB on January 7. Here is his unofficial biography from the Harvard website:

Seung Wha Chang has been a Professor of Law at Seoul National University School of Law since 1995 and has taught international trade, international business transactions, and international arbitration. Professor Chang also taught as Visiting Professor of Law at Harvard, Yale, Stanford, NYU, Duke, Georgetown, UCLA, NUS and other law schools. Prior to teaching, he practiced at Covington & Burling and was a Judge of the Seoul District Court. Professor Chang served as a WTO Panelist for seven highly profiled dispute settlement proceedings including US-FSC and Canada-Aircraft II. He is one of the leading arbitrators in the Asia-Pacific region and regularly serves as an arbitrator (sole, co-arbitrator or chair) for ICC and other leading arbitral institutions. Professor Chang is currently Co-President of APRAG and also serves as Chairman of Korean Council for International Arbitration and Member of the ICC International Court of Arbitration.

ILCurry wishes Prof. Chang the best for his term at the AB. Our best wishes also to Mr. Oshima for a healthy and fulfilling post-AB life!

BREAKING: Justice Bhandari Elected to ICJ

The results of the ICJ elections held today in New York are out. India’s nominee, Justice Dalveer Bhandari, has been elected to the World Court. Justice Bhandari obtained 122 votes in th UNGA and 13 votes in the UNSC. Justice (retd.) Florentino Feliciano, the other nominee from the Philippines, secured 58 votes in the UNGA. The official ICJ press release, which includes a lengthy curriculum vitae of Justice Bhandari circulated by the UN Secretariat, can be found here.

ILCurry congratulates Justice Bhandari on his appointment to the ICJ. The last Indian to serve at the ICJ was Raghunandan Swarup Pathak, who retired in 1991.

UPDATE (28 April 2012):

Here are some official photos from the UN website of the elections at the UN headquarters in New York:

Last Minute Challenge Against Indian ICJ Nominee Dismissed by Sup. Ct.

The elections for a vacant judge’s position at the ICJ are scheduled for today (April 27). As previously noted, the two nominees are: Justice Dalveer Bhandari (India) and Justice (retd.) Florentino Feliciano (Philippines).

Some recent reports suggest that Justice Bhandari’s nomination was challenged (unsuccessfully) before the Supreme Court of India. An Indian LL.M. student filed a PIL challenging the nomination of Justice Bhandari on the ground that the nomination of a sitting judge of the Supreme Court compromised the independence of the national judiciary. According to one report, the petitioner stated:

 As a matter of principle, selection of a sitting judge of the highest court of the land by the government creates a grave situation of conflict of interest and compromises the independence of the judiciary. The independence of the judiciary is part of basic structure of the Constitution of India. Selection to post like that of a judge of the ICJ, by its very nature, involves heavy lobbying on part of the government,” thepetition said. “Many of the important cases dealt by a judge of this court involve the Union of India as either the petitioner/appellant or as a respondent.

According to another:

Advocate Prashant Bhushan appearing for the petitioner, a LLM student, meanwhile argued that if Justice Dalveer Bhandari fails to obtain the position at the ICJ, it would be difficult for him to maintain his judicial independence henceforth as he would have sought assistance of the government for the appointment. The position will see an election for the post on April 27.

Referring to the nine-judge constitutional bench verdict in ‘Advocate on Record Association case’ which had ruled that judicial appointments shall not be influenced by the executive, Bhushan said the present case was like a case in which a sitting judge of the Supreme Court is offering himself a position to the post of member of the Lok Sabha while allowing political parties to lobby for him.

The petitioner seems to have challenged not the suitability of Justice Bhandari per se, but the practice of nominating sitting Supreme Court judges at all. We have had a lengthy and detailed debate, albeit from a slightly different perspective, on whether Indian Supreme Court judges are ideal ICJ judges here. It is notable that even though the Supreme Court dismissed the challenge, it suggested that the vires of the rules made by the government for the nomination process could have been challenged instead.

More after the result of the election!

Vodafone BIT Dispute: India’s Initial Response

In response to Vodafone filing a notice of dispute against India under the India-Netherlands BIT, here is India’s initial response as per a news report:

Referring to the recent threat of Vodafone to invoke bilateral investment treaty with the Netherlands on the tax issue, the official said the arbitration clause in the BIPA (Bilateral Investment Protection Agreement) cannot apply in Vodafone-Hutchison deal as it was signed in Cayman islands.

“The deal happened in Cayman islands and they are invoking India-Netherlands BIPA,” the finance ministry official said, adding “while in the Supreme Court Vodafone said that the deal happened outside India, under BIPA it is saying it has made substantial investment in India.”

Under the BIT, an “investment” for the purposes of jurisdiction of the arbitral tribunal exists if there an  ”asset invested in accordance with the national laws and regulations of the Contracting Party in the territory of which the investment is made….” Article 1(a) also provides the usual inclusive listing of what constitutes “investment” for the purposes of the BIT.

India Lobbies for Justice Bhandari’s Election to the ICJ

With the election date of 27 April 2012 fast approaching, India has stepped up its efforts seeking support for the election of current Supreme Court Justice Dalveer Bhandari to the ICJ. As noted previously, the two nominees seeking election to the vacancy created by Judge Al-Khasawneh’s departure from the ICJ are India’s Justice Bhandari and Florentino Feliciano from the Philippines.

At home, earlier this month, India’s External Affairs Minister held a meeting with the relevant ambassadors and diplomats in Delhi to to make India’s “case for Justice Bhandari and to ask them to support India.”

Effort’s to garner support for Justice Bhandari are also underway in New York. A recent report notes that “on the possibility of Justice Bhandari’s victory, official sources said India has been lobbying hard for the support” and that India “appears confident of his victory”.

Vodafone Initiates BIT Dispute Against India

As per a press release by Vodafone, on 17 April 2012, Vodafone’s Dutch subsidiary, Vodafone International Holdings BV, served a notice of dispute against the Indian government initiating the dispute settlement process under the India-Netherlands bilateral investment treaty (WSJ; FT; The Hindu suggesting that the Indian government had not received the notice as of 17 April).

Vodafone’s Complaint:

The notice of dispute is not publicly available. As per the Vodafone press release, however:

The dispute arises from the retrospective tax legislation proposed by the Indian government which, if enacted, would have serious consequences for a wide range of Indian and international businesses, as well as direct and negative consequences for Vodafone. The proposed legislation would also countermand the verdict of the Indian Supreme Court in January 2012, which ruled that Vodafone had no liability to account for withholding tax on its acquisition of indirect interests in Hutchison Essar Limited in 2007.

…

Vodafone believes that the retrospective tax proposals amount to a denial of justice and a breach of the Indian government’s obligations under the BIT to accord fair and equitable treatment to investors.

The Dispute Settlement Process under the India-Netherlands BIT:

Whatever the political and domestic ramifications of the dispute in India, the dispute settlement process under international investment law has now been triggered. Specifically, Article 9 of the India-Netherlands BIT provides that by notifying the host-state of its “intentions”, the investor can trigger the dispute settlement mechanism under the BIT. Once such a notice is served (as has been by Vodafone), the treaty provides for a 3 month period of negotiations for the amicable settlement of the dispute. If negotiations fail to resolve the dispute within 3 months, conciliation may be resorted to if both parties so agree. Otherwise, or in case the conciliation proceedings are terminated at any stage, arbitration proceedings are initiated under Article 9(3) of the BIT, being in all likelihood, an UNCITRAL arbitration before an ad hoc arbitral tribunal.

On the alternatives to arbitration generally:

For what its worth, Vodafone’s official press release is quite aggressively worded. As I’ve noted above, the treaty text makes an explicit reference to the first 3 months as a period for negotiations for the amicable settlement of the dispute (Article 9(1)). In fact, as per Article 9(1), the “intention” behind the first notice of dispute should be to negotiate an amicable settlement.  According to Vodafone, however, this notice “is the first step required prior to the commencement of international arbitration under the Bilateral Investment Treaty”. The fact that Vodafone sees this notice not as a sign of engaging in negotiations, but only as a precursor to the arbitration suggests an eagerness on part of Vodafone to resort to arbitration, and a disinterest in settling amicably.

On how this relates to the larger issue of the space for less-adversarial means of dispute settlement under BITs, I refer you to this recent UNCTAD study on the alternatives to arbitration as a means for the settlement of investor-state dispute settlement provision. (In particular, see Prof. Michael Reisman’s remarks on p.22, and the commentary by Lisa Bingham on p.33).

To pique your curiosity, here’s a quote from Prof. Reisman’s piece:

Ironically, what international lawyers proudly point to as a significant systemic progression, the ADR community seems to view as a problem. ADR proponents appear to believe that there is too much third-party dispute resolution [investment arbitration] in the field of international investment. In point of fact, there is actually very little, and much of it is already being disposed of through informal settlement. The above-stated number 318, which seems enormous in comparison to other international judicial or arbitral instances (for example the dockets of the Permanent Court of International Justice, the International Court of Justice, and the Permanent Court of Arbitration) must be put into context. The gross amount of foreign direct investment is very large, indeed greater than the volume of world trade. There are approximately 80,000 multinational enterprises, which are by definition foreign direct investors. These entities have some 100,000 affiliates. If these 180,000 potential claimants are factored by the number of BITs, bearing in mind that many of these entities are multiple foreign direct investors and that not every foreign direct investor is a multinational enterprise, then the number of actual disputes going to arbitration seems to be a miniscule fraction of the universe of foreign direct investment.

Presidential Reference to Cover BIT Disputes

Meanwhile, in the presedential reference filed before the Supreme Court of India it appears that the government has sought the “the Supreme Court’s direction on how to deal with foreign investors who have invoked bilateral treaties to protect their investment in 2G licences.”

India Initiates WTO Dispute over US CVD on Steel

India has filed a dispute against the United States, over the countervailing duty imposed by the latter on the import of certain steel products from India. According to some reports, India is also likely to initiate a dispute over certain US visa fees in the near future.

Weekly Update: Investment Arbitration, BRICS, WTO, Tulbul and More….

Here are some of the major international legal developments of relevance to India and South Asia for the week ending 31 March 2012:

Investment Arbitration

• Vodafone may file a claim against India under the India-Netherlands BIT for the capital gains tax sought to be retrospectively imposed by India against it: Indian Express, Independent, DNA, Wall Street Journal (paywalled).
• Norwegian telecom operator Telenor, faced with the prospect of its Indian joint venture losing 22 2G mobile licences due to the Supreme Court judgment in the 2G case, has filed a notice of dispute  against India under the India-Singapore BIT seeking damages to the tune of USD 14 billion: Economic Times. [With a notice of dispute already filed by the Russian company Sistema against India, this makes it two investment treaty disputes arising out of the Supreme Court's 2G judgment]

WTO Disputes

• India is preparing to file a dispute against the US at the WTO over the visa fee charged by the latter for Indian software companies. The claim: ”discrimination” against the Indian software companies which are being asked to pay higher H1B and L1 visa fee for their employees than the American firms for bringing more number of skilled immigrants to their country at lesser costs:  Economic Times.
• The US called upon India to accede to the government procurement agreement — a plurilateral WTO agreement.
• The US and EU have come out against the local content requirements in India’s Jawaharlal Nehru Solar Mission, which requires requires solar mission investors to use Indian manufactured solar modules and source 30 percent of their inputs from India: Hindustan Times. The Indian government is already reported to be preparing its strategy in case a dispute is filed at the WTO.

International River Water Disputes

• India and Pakistan may resort to arbitration under the Indus Waters Treaty to settle the dispute over the Tulbul navigation project in Kashmir: Nation. For now, the official word from the Indian government is that it is exchanging technical data with Pakistan, and that “if required, they will explore the way forward for resolving the issue under the provisions of the Treaty”. (Recall that an arbitration between the two countries over the Kishenganga power project is already underway at the PCA; in addition, arbitration is also being considered for the Nimoo-Bazgo power project.)

EU Emissions Scheme

• The Indian government has confirmed that it will be directing Indian airlines not to participate in the EU’s controversial aviation emissions rule. (Recall that China has already boycotted the EU scheme, as well): ICTSD.

India-Pakistan Trade

• Following up on its commitment to grant MFN treatment to India, Pakistan’s commerce ministry announced that India will now be able to export all products into Pakistan, with the exception of a ‘negative list’ of 1,200 items.

UN Special Rapporteur on AFSPA in Kashmir

• After a visit to Kashmir, rhe UN Special Rapporteur on extrajudicial, summary or arbitrary executions stated that the Indian Armed Forces (Special Powers) Act has become a symbol of “excessive state power” and has “no role to play in a democracy”: NDTV, Hindustan Times. The official press release can be found here.

BRICS

• The past week saw the leaders from Brazil, Russia, India, China and South Africa assemble in Delhi for the fourth BRICS Summit. The theme of the summit was “BRICS Partnership for Global Stability, Security and Prosperity”.
• The countries were called upon to support a common developing country candidate as the successor of DG Lamy.
• In addition, the heads of state of the BRICS countries signed two agreements supporting trade in local currencies between them. The two agreements are: (i) the Master Agreement on Extending Credit Facility in Local Currencies; and, (ii) the BRICS Multilateral Letter of Credit Confirmation Facility Agreement. More details can be found in a MEA document here.
• In culmination of the summit, the BRICS countries issued the “Delhi Declaration“. Here are some excerpts from the Declaration:

• On the Doha Round at the WTO:

16. We will continue our efforts for the successful conclusion of the Doha Round, based on the progress made and in keeping with its mandate. Towards this end, we will explore outcomes in specific areas where progress is possible while preserving the centrality of development and within the overall framework of the single undertaking. We do not support plurilateral initiatives that go against the fundamental principles of transparency, inclusiveness and multilateralism. We believe that such initiatives not only distract members from striving for a collective outcome but also fail to address the development deficit inherited from previous negotiating rounds. Once the ratification process is completed, Russia intends to participate in an active and constructive manner for a balanced outcome of the Doha Round that will help strengthen and develop the multilateral trade system.

• On Syria:

21. We express our deep concern at the current situation in Syria and call for an immediate end to all violence and violations of human rights in that country. Global interests would best be served by dealing with the crisis through peaceful means that encourage broad national dialogues that reflect the legitimate aspirations of all sections of Syrian society and respect Syrian independence, territorial integrity and sovereignty. Our objective is to facilitate a Syrian-led inclusive political process, and we welcome the joint efforts of the United Nations and the Arab League to this end. We encourage the Syrian government and all sections of Syrian society to demonstrate the political will to initiate such a process, which alone can create a new environment for peace. We welcome the appointment of Mr. Kofi Annan as the Joint Special Envoy on the Syrian crisis and the progress made so far, and support him in continuing to play a constructive role in bringing about the political resolution of the crisis.

• On Iran:

22. The situation concerning Iran cannot be allowed to escalate into conflict, the disastrous consequences of which will be in no one’s interest. Iran has a crucial role to play for the peaceful development and prosperity of a region of high political and economic relevance, and we look to it to play its part as a responsible member of the global community. We are concerned about the situation that is emerging around Iran’s nuclear issue. We recognize Iran’s right to peaceful uses of nuclear energy consistent with its international obligations, and support resolution of the issues involved through political and diplomatic means and dialogue between the parties concerned, including between the IAEA and Iran and in accordance with the provisions of the relevant UN Security Council Resolutions.

Enrica Lexie Incident: Firing by Italian Marines a Terrorist Act? Italy Accepts Indian Courts’ Jurisdiction?

Following up on our discussion of the Enrica Lexie incident off the coast of Kerala, here’s an update on the latest developments:

1. As noted earlier, the detained Italian marines as well as the Italian consulate had filed a  petition in the Kerala High Court for declaration that Indian courts did not have jurisdiction to try the Italian marines. The oral arguments in the matter are now over and the court has reserved its judgment. An indication of the Court’s mindset, however, can be gauged from its classification of the shooting by the Italian marines as an act of terrorism. From the jurisdictional perspective, this is very interesting because the Court has previously observed in another case (Raymund Gencianeo v.State of Kerala, 2004 Cri. LJ 2296, para. 6) that Indian courts have jurisdiction over criminal offences committed by foreigners only in India’s territorial waters. If, however, the act is treated as a terrorist act, instead of just a criminal act, it could be possible for Indian courts to exercise universal jurisdiction, irrespective of where the alleged crime occurred. (See this, for further discussion)

2. Italy, on the other hand, appears to have accepted Indian courts’ jurisdiction over the above incident. This detail emerged at a meeting between the Indian and Italian prime ministers on the sidelines of the Nuclear Security Summit in Seoul on 26 March 2012.