It’s official: Italian Marines won’t return; Italy initiates international dispute against India

According to a press-release issued by the Italian Ministry of Foreign Affairs today, the Italian marines facing trial in India for the shooting and killing of Indian fishermen off the coast of Kerala will not be returning to India. “Returning?”, you might rightly wonder, considering that the marines are under trial in India and have spent the past year or so imprisoned there. Turns out that the marines were allowed to go to Italy by the Indian Supreme Court to vote in the Italian parliamentary elections. (Now we know what happened in Italy!) Apparently, according to an Indian lawyer representing the marines, “[t]he judges were sympathetic to the marines’ request to exercise their democratic right of casting their votes”.

As a preliminary matter, and correct me if I am missing something here, I have many dear Italian friends residing outside Italy, and all of them voted in the national elections by postal ballot. I wonder what made the Indian Supreme Court think that the marines needed to be physically present in Italy to exercise their franchise, when even the Italian government’s own website details the procedure of voting by post for Italians resident overseas. And, if the Court didn’t notice, why didn’t the counsels for the Indian government not point this out? Seems to me the curious case of a gun and a foot.

I should also note that this is not the first time the marines were given home leave to visit Italy. Last December, the High Court of Kerala had allowed the marines to go home to celebrate Christmas and the New Year with their families in Italy. Then, as well as now it seems, the Italian government, through its embassy in Delhi, submitted an undertaking in the Court guaranteeing that they would return to India and face trial. At the end of the first visit, the Italian government lived by its promise, and return they did in January. This time, however, things aren’t looking so nice. To refer to the Italian Ministry of Foreign Affairs press-release: “Italy informed the Indian government that, given the formal establishment of an international dispute between the two States, the riflemen Massimiliano Latorre and Salvatore Gironel will not return to India at the end of the permission granted to them” (Google translation).

Formal dispute? Yes. We know that following the arrest of the Indian marines in the Indian port of Kochi, Italy has persistently maintained that India lacks jurisdiction to try the marines. Even if the  Indian courts had jurisdiction, Italy argues that the marines would be protected by immunity by virtue of their position in the armed force. In India, these issues were thought to have been settled by a judgment of the Supreme Court, holding that India has jurisdiction to try the marines under its domestic criminal laws, and that any plea relating to immunity could only be raised and addressed during the actual trial process, and not a supreme court proceeding. Italy obviously disagrees with the Supreme Court’s ruling, and believes that it is contrary to India’s obligations under international law. Referring to the press-release again:

Italy has always held that the conduct of the Government of India violated the international law obligations imposed on India by virtue of customary law and treaty law, in particular the principle of immunity from the jurisdiction of the foreign state bodies and the rules of the Convention United Nations Convention on Law of the Sea (UNCLOS) of 1982.

In the aftermath of the judgment of 18 January 2013 of the Supreme Court of India, Italy has formally proposed to the Government of New Delhi, the start of a bilateral dialogue in the search for a diplomatic solution to the case, as suggested by the Court, where drew the hypothesis of cooperation between States in the fight against piracy, as envisaged by the above UNCLOS.
In light of the lack of response of India to the Italian request to enable such cooperation, the Italian Government considers that there is a dispute with India concerning the rules as contained in the Convention and general principles of international law applicable to the case.

Against this backdrop, the Italian ambassador in Delhi delivered today a note verbale to the Indian government notifying it of a formal dispute and expressing Italy’s

willingness to reach an agreement on a resolution of the dispute through international arbitration or judicial settlement, asking India to activate the consultations provided for in UNCLOS.

So why is it that the marines returned after their Christmas holiday in January, but will not be coming back this time? The answer seems to be in the Supreme Court of India’s judgment delivered on 18 January, after their return. The Court upheld India’s jurisdiction to try the marines. Up until then, Italy was obviously hopeful that the Supreme Court would side with its position. But with this judgment, it became clear that the prosecution in India would go ahead. And so, when the time came for the marines to board their return flight, following the great satisfaction that accompanies any voting exercise, they simply declined!

With this background, I hope to return soon with my thoughts on what lies ahead. For now, I hope that the Indian Supreme Court and the Government are happy with the results of the Italian elections (quite similar to what happens in India after every election), and the role they played in it!

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.”