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Shot in the arm for foreign investors

The landmark Supreme Court judgment of September 6,which held that if an Indian investor were to go in for arbitration with a foreign company abroad,that Indian courts will then have no jurisdiction to interfere with such an arbitration award,could have several ramification in the current context.

Written by Anil Sasi | Published: September 25, 2012 1:22:13 am

The landmark Supreme Court judgment of September 6,which held that if an Indian investor were to go in for arbitration with a foreign company abroad,that Indian courts will then have no jurisdiction to interfere with such an arbitration award,could have several ramification in the current context.

Coming at a time when a growing list of arbitration notices — at six and counting — served by international investors invoking provisions of the numerous bilateral investment protection pacts signed by India has already put the government in a spot of bother,the apex court judgment by a five-judge Constitution Bench,effectively overturning a 10-year-old ruling that had allowed domestic companies to approach Indian courts against unfavourable awards by foreign arbitration panels,is clearly a big boost for foreign investors involved in litigation with Indian firms.

As the number of arbitration notices is mounting,the other big worry for the government is that India has,in the past,lost the only such dispute that went on to the arbitration stage. The award (September 30,2011) of the International Tribunal in the case between Australia’s White Industries Ltd and the Government of India (Ministry of Coal),under the Bilateral Investment Promotion and Protection Agreement (BIPA) between India and Australia,went against the Government of India. This is a case that dates back to a decade,when White Industries won a foreign arbitration against Coal India but was unsuccessful in enforcing the award till last year when it used the Indo-Australian bilateral investment protection treaty. Till date,India has signed BIPAs with 82 countries,starting with the United Kingdom in 1994. Of these 82 countries,BIPAs with 72 countries have been enforced. Besides,India has signed 17 Free Trade Agreements,Comprehensive Economic Partnership Agreement (CEPA),Comprehensive Economic Cooperation Agreement (CECA) and Preferential Trade Agreements (PTAs).

anil.s@expressindia.com

Notices served against India under BIPAs/CECA:

Devas Employees Mauritius Pvt Ltd,under BIPA with Mauritius

Sistema JSFC,Russia under BIPA between India and Russia

Telenor Asia Pte Ltd,Singapore under CECA with Singapore

Capital Global/Kaif Investment (Loop Telecom) under BIPA with Mauritius

Vodafone International BV under BIPA with the Netherlands

The Children’s Investment Fund under BIPA with the UK and Cyprus

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