An Update on Investment Treaty Arbitrations Against India

Over the past year or so India has been involved in a number of disputes with foreign investors which are at various stages of settlement. Discussions to reach a settlement are apparently underway in the dispute initiated by Vodafone against the retrospective capital gains tax sought to be imposed by the government, although the FT notes that a settlement is “highly unlikely until after India’s forthcoming national election in 2014, if at all.”

Negotiations have failed to yield result in at least two other disputes, leading to the initiation of arbitration under some investment treaties. An arbitral tribunal has been set up in a dispute initiated by “Devas Multimedia and its U.S. associates (who invested in the deal through foreign direct investment routed via Mauritius) against the Government of India following the cancellation of the deal for the launch of two satellites and the allocation of S-band spectrum to Devas.” The arbitration has been commenced under the India-Mauritius BIT and will be held under the UNCITRAL Rules with the Permanent Court of Arbitration in The Hague acting as the registry. The tribunal comprises of Canadian lawyer and politician Marc Lalonde QC (presiding arbitrator), Chilean lawyer and currently a Judge ad hoc at the ICJ Francisco Orrego Vicuña, and the former Chief Justice of Rajasthan High Court Justice Anil Dev Singh. The investor-claimants are being represented by lawyers from Skadden, Arps, Slate, Meagher and Flom, LLP. India is instructing lawyers from the Indian law firm Khaitan & Co. and Curtis, Mallet-Prevost, Colt and Mosle, LL.P.

Reports also suggest that an arbitral tribunal has been constituted in a dispute initiated by ByCell, a telecommunications firm incorporated in Switzerland and owned by a Cypriot company and Russian nationals, under India’s BITs with Cyprus and Russia. The Lex Arbitri blog offers some information on the events leading to the dispute. According to the Economic Times, India has appointed Professor Brigitte Stern as its party appointed arbitrator. Details about the other arbitrators are not yet public. Curtis will also represent India in this proceeding.

On the appointment of Prof. Stern, the Indian government is apparently of the view that “[a] strong arbitrator will ensure that government’s case is represented effectively”. While this view stresses the importance of party appointed arbitrators, I think the Economic Times goes a bit far in claiming that India has “rope[d]” in “Brigitte Stern to take on Swiss telco ByCell”.  The institution of party appointed arbitrators is a common feature of international adjudication. Parties regularly choose their arbitrators in international proceedings and even the ICJ allows States to appoint ad hoc Judges for disputes in which a State party does not have a Judge of its nationality on the Court. In a diverse international legal order, party appointment can serve a useful purpose as it allows the parties to choose a person who, in their opinion, can best understand their concerns, position and culture, and can effectively explain these to his or her fellow adjudicators. India’s reason to appoint Prof. Stern appears to be reasonable in so far as it is based on India’s belief that Prof. Stern is best placed to understand the concerns of developing host-States as respondents in investment arbitration. But, now that Prof. Stern has been appointed, she also has certain obligations of independence and impartiality as a judicial member of the tribunal. To say that she has been appointed by India to “take on” ByCell presents an inaccurate picture of the role and function of an arbitrator in a proceeding of this nature. India’s lawyers will be “taking on” ByCell, not the arbitrator appointed by India.

On a related note, the issue of India’s BITs recently came up for discussion in the Indian parliament. A Member of Parliament inquired how many BITs India had concluded. In response, the Minister of State for Commerce stated that India has concluded BITs with 82 States, of which 72 BITs have come into force. He also stated that India has paid Aus $ 98,12,077 to White Industries following the award against India. Interestingly, the Minister noted that, in light of its loss in the White Industries arbitration, India is now reviewing the text of its model BIT.

Hat tip to Aditya Singh for sharing the Economic Times article on the ByCell arbitration.

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2 thoughts on “An Update on Investment Treaty Arbitrations Against India

  1. Hi,
    Khaitan did not represent India in White Industries. Fox Mandal did.
    Also it is not Curtis DC office that is representing India, it is the New York office.

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