Cairn-India Investment Arbitration in its final stage (22 January 2019)

The Economic Times report is available here.

In an operational update, Cairn Energy has announced that the pleadings and hearings before the Arbitral Tribunal in the Cairn-India arbitration on the retrospective tax issue have been completed. The Arbitral Tribunal is in process of writing the award and they are expecting it to be released soon. The award will be the first in the series of expected awards on the issue of levy of a retrospective tax which had led to a series of investment arbitration claims against India. Interestingly, a number of companies had issued notices (under various BITs) to save and store their claims for the future.

SIAC Publishes the Investment Arbitration Rules and they look good. 

The SIAC Investment Arbitration Rules 2017 (First Edition) are available here.

The Singapore International Arbitration Centre has published the first of their kind rules for the administration of an Investment Arbitration. The rules have tried (quite successfully) to ensure higher threshold of procedural sensitivity that is required in the field of investment arbitration. Notably, the rules have quite a few radical changes. For instance, the parties need to file everything they have at the beginning of the arbitration along with their Statement of Claim/Defense in a Memorial style. The detailed review is available at the blog.

India’s Application to get the HEPI’s confirmation proceedings dismissed rejected

The Memorandum of Opinion by the Court is available at the ITA website here.

Previously, we informed you about the petition by HEPI, a US Company which had sought to get an award against the Government of India confirmed in US District Court of Columbia. Since India is a foreign Country, HEPI was required to carry out the service under the Foreign Sovereign Immunities Act (FSIA). Subsequently, India requested the Court to to dismiss the Petition, alleging lack of proper service on the part of HEPI and as a consequence of the same, the Court lacked personal jurisdiction over it. However, while the Court held that HEPI had failed to effect the service on India properly, it was not a sufficient cause in itself to dismiss the petition. Subsequently, the Court has allowed HEPI to effect a proper service on India under FSIA while rejecting the challenge to the Petition itself. .

Indian Company wins €20 million Claim against Poland

The award is available at the ITA Website here

Summary: Flemnigo Dutyfree Shop Private Limited, an Indian Company owned by the Flemnigo Group based in Dubai has successfully secured an award of €20 Million against Poland for breach of its treaty obligations to accord fair and equitable treatment and protection against unlawful expropriation. The dispute pertained to the proposed long-term modernization plan for the Warasaw Airport where Claimant owned company had several shops. The State controlled Polish Airports State Enterprise (PPL) proceeded to terminate the lease agreements with Claimant for these shops on grounds of non-renewal of bank security and insurance policies. The Tribunal found that the termination (required for the modernization plan) was in bad faith i.e. based on frivolous reasons and with a motive to avoid paying due compensation to the Claimant for such termination. It further held that Poland was responsible for the actions of PPL and it had effectively failed to accord fair and equitable treatment to the Claimant. Along with the damages, the Tribunal also awarded 60% of the costs to the Claimants.

Hardy Exploration & Production (India) Inc [HEPI] files confirmation proceedings in US Court against India

The Petition is available at ITA Website here.

Summary: HEPI, a US Company has sought to get an award against the Government of India confirmed in US Disctrict Court of Columbia. If the confirmation is granted, the award will become enforceable in India as a foreign judgment. The dispute concerns a Production Sharing Contract HEPI, as part of a consortium, entered with Government of India under which an award was passed on 2 February 2013. The Government sought to get the award set aside but the same was refused by the Hon’ble Delhi High Court in July 2015. A review petition filed by the Government was also rejected in January 2016. The enforcement proceeding filed by HEPI is still pending in Delhi HC.

[UPDATE: INDIA’S OBJECTION REJECTED IN US COURT. READ MORE HERE.]

Indian Cabinet approves signing of new BIT with Cambodia

PIB Press Release is available here

Our View: It is interesting to note that India has negotiated the new BIT with Cambodia based on the New Model BIT approved in December 2015. The Model BIT 2015 is biased and/or heavily tilted in favour of capital importing nations. India being a developing nation will be better placed if it signs the same with a developed nation. However, if the the new Indo-Cambodia BIT is based on it, Cambodia, as the smaller and capital importing nation among the two, will stand to benefit. However, we will reserve our comments and criticism on the same till the final draft is released in public.

India pitches for a separate Dispute Resolution Mechanism for developing countries/BRICS

Link to Economic Times Report

Our View: The stand taken by the Hon’ble Finance Minister of India is not an isolated incident. It has to be seen in the larger context of the movement away from BIT’s which provide for investor-state dispute settlement frameworks. India has recently terminated BIT’s with more than 57 Countries while has given notice for joint interpretation to 25 other countries. Further, countries like Indonesia, Brazil, South Africa and few Latin American countries have either terminated the BIT’s or have shown the intention to do so. The recent Devas award against India may have only reinforced the view of the government that the regular ISDS mechanisms as found in BIT’s or ICSID may not be ideal for a developing economy. It would be interesting to see the response of China to such a proposal given that the views of the other BRICS members- India, Brazil, South Africa and Russia are well known i.e. unenthusiastic towards ISDS.