JINDAL JOURNAL OF PUBLIC POLICY

AUGUST 2012 ISSUE 1 VOLUME 1

Today and Tomorrow
Sanjay G. Reddy
Global Public Policy as a
Field of Study: A View from Asia
Kanti Bajpai, Scott Fritzen and
Kishore Mahbubani
Policy Cauldron : Some Imperatives
for Emerging Economies
Rajeev Malhotra
Using Randomised Experiments
to Improve Public Policy
Vikram S. Pathania
Teaching in a Public Policy
School: Some Personal Views
Jak Jabes
Principles for Anti-Corruption
Agencies: A Game Changer
Samuel De Jaegere
Public Policy Analysis
ARTICLES
EDITORS FOREWORD
Challenges of Corruption and
Good Governance: A Human
Rights Perspective
C. Raj Kumar
Migration, Development
and Children Left Behind:
A Multidimensional
Perspective
Rodolfo de la Garza
Governance Arrangements
for Global Economic
Challenges: A Political
Science Perspective
Thierry Soret
Pathological Pace of
Dispute Settlements in
India: Implications of
an International Arbitration
Prabodh Saxena
Impact of the Global
Crises on Civil Society
Organisations
Eva-Maria Hanfstaengl
ISSN 22778743
Jindal Journal of Public Policy
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Editors-in-Chief:
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R. Sudarshan, Professor and Dean, Jindal School of Government and Public Policy (from 1 August 2012)
Executive Editors:
Aseem Prakash, Assistant Professor and Assistant Dean, Jindal School of Government and Public Policy
Swagato Sarkar, Associate Professor and Assistant Dean, Jindal School of Government and Public Policy
Editorial Advisory Board :
Daniel Bach, Professor & Directeur de recherche du CNRS Centre Emile Durkheim Science Politique
et Sociologie comparatives, Sciences, Universit de Bordeaux, France
Seyla Benhabib, Eugene Meyer Professor of Political Science and Philosophy, Yale University, USA
Sarah Cook, Director, United Nations Research Institute for Social Development, Switzerland
Leela Fernades, Professor of Women's Studies and Political Science, University of Chicago, USA
Alfredo Saad Filho, Professor of Development Studies, School of Oriental and African Studies,
University of London, UK
Jean-Louis Halprin, Professor of Law and Public Policy, Ecole Normale Superieure, France
Robert Jenkins, Professor of Political Science, Hunter College and The Graduate Center, City
University of New York, USA
Amitabh Mattoo, Professor and Director, Australia India Institute, University of Melbourne, Australia
Prachi Mishra, Senior Economist, International Monetary Fund, USA
Mick Moore, Professorial Fellow, Institute of Development Studies, UK
Peter Newell, Professor of International Relations, University of Sussex, UK
Ifeanyi Prinuel Onyeonoru, Professor and Director, Centre for Peace and Conflict Studies, University
of Ibadan, Nigeria
Aseem Prakash, Professor of Political Science, Walker Family Professor for the College of Arts and
Sciences, University of Washington, USA
Gustav Ranis, Frank Altschul Professor Emeritus of International Economics, Yale University, USA
Sanjay G. Reddy, Associate Professor, The New School for Social Research, USA
Dani Rodrik, Professor of International Political Economy, Harvard University, USA
Gita Sen, Professor, Indian Institute of Management, Bangalore, India
Ian Shapiro, Sterling Professor of Political Science and Henry R. Luce Director, The Whitney and Betty
MacMillan Center for International and Area Studies, Yale University, USA
T.N. Srinivasan, Professor Emeritus in Economics, Yale University, USA
Frances Stewart, Professor Emeritus in Development Economics, University of Oxford, UK
Arvind Virmani, Executive Director, International Monetary Fund, USA
JINDAL JOURNAL OF PUBLIC POLICY
AUGUST 2012 VOLUME 1 ISSUE 1
Contents
Articles
Editors Foreword 1

Public Policy Analysis Today and Tomorrow 3
Sanjay G. Reddy
Global Public Policy as a Field of Study: A View from Asia 8
Kanti Bajpai, Scott Fritzen and Kishore Mahbubani
Policy Cauldron : Some Imperatives for Emerging Economies 26
Rajeev Malhotra
Using Randomised Experiments to Improve Public Policy 52
Vikram S. Pathania
Teaching in a Public Policy School: Some Personal Views 64
Jak Jabes
Principles for Anti-Corruption Agencies: A Game Changer 79
Samuel De Jaegere
Challenges of Corruption and Good Governance: A Human 121
Rights Perspective
C. Raj Kumar
Migration, Development and Children Left Behind: 151
A Multidimensional Perspective
Rodolfo de la Garza
Governance Arrangements for Global Economic Challenges: 195
A Political Science Perspective
Thierry Soret
Pathological Pace of Dispute Settlements in India: Implications 234
of an International Arbitration
Prabodh Saxena
Impact of the Global Crises on Civil Society Organisations 248
Eva-Maria Hanfstaengl
PATHOLOGICAL PACE OF
DISPUTE SETTLEMENTS IN
INDIA: IMPLICATIONS OF AN
INTERNATIONAL ARBITRATION
Prabodh Saxena*
This paper analyses the Award of the UNICTRAL International Ar-
bitral Tribunal in the case between White Industries Australia Ltd. and
the Republic of India over a contract that the former entered into with Coal
India Ltd. for the supply of equipment and development of a coal mine at
Piparwar in the Indian state of Jharkhand, while also discussing the far-
reaching implications of the Award. The paper has been organised in seven
sections. Section II introduces preliminary facts about the case and its jour-
ney in various courts of India. It depicts the cobwebs of legal complexities
in the Indian judicial system. Section III briefy discusses the crucial issues
before the Tribunal and also the operative part of the Award. Section IV
outlines the deliberations before the Tribunal as well as the fndings of the
Tribunal on the main contention that the time taken by the Indian courts
amounts to denial of justice which is a breach of obligations of India un-
der international law. Section V is devoted to a detailed description of the
reasoning of the court for giving the Award including obligations of the ef-
fective mean standard laid down by the Chevron Tribunal. In Section VI,
the paper gives an account of the legalistic arguments against the Award and
the challenges emerging from this Award for India. Section VII contains the
conclusions as also a discussion on the message of the Award for the Indian
State, in general, and the higher judiciary, in particular.
Keywords: Regulation, International Arbitrary Tribunal, Coal
Mines, Judiciary
*Joint Secretary, Government of India; Email: prabodh.saxena @yahoo.com. The views
expressed in this article are personal.
Introduction
In the 1990s, when India took a conscious decision to integrate with
the global economic ingress and engress, it presented the scenario of
Dispute Settlements and International Aribtration 235
an investor-friendly regime to the investor architecture. The Bilateral
Investment Promotion and Protection Agreements, popularly referred to
as the BIPAs, constituted an important part of Indias scheme to enable
and encourage the fow of capital for investor and trade across nations.
Since the execution of the frst BIPA with the United Kingdom in 1994,
India has extended similar agreements with a large number of countries
and the tally now stands at a mammoth 82 BIPAs signed.
1
Although
Indias BIPA portfolio is extremely diverse and rich, yet it was till recently
a matter of pride that there had been no litigation on any of these BIPAs.
2

Contrast this with the developed countries, which face huge litigations
with investors and opposite Governments. On the fip side, to this extent,
India lacked experience in arbitration jurisdiction, which stifed discussion
on improving the model text and the negotiation drafts.
The decision of the UNICTRAL International Arbitral Tribunal in the
frst such case between White Industries Australia Ltd. versus the Republic
of India on 30 November 2011, has, therefore, come as a shock.
3
As
India becomes more and more integrated with the world and continues
with its plan to engage extensively on investment treaties, arbitration
disputes under BIPA are likely to become more frequent. After the recent
order of the Supreme Court cancelling the spectrum allocation made by
the Government of India, the latter has received notice under the India
Russia BIPA.
4
Similarly, the Norwegian telecom giant Telenor, which also
faces the prospects of its Indian joint venture losing 2G mobile licences
due to the Court order, served a notice on the Government, threatening
international arbitration and claiming damages of nearly $14 billion.
5

Telenor invoked the provisions of Indias Comprehensive Economic
Cooperation Agreement (CECA) with Singapore,
6
seeking a solution from
the Government within six months, failing which it threatens to drag the
matter for an international arbitration for failure to protect its investment.
This paper not only analyses the particular Award by UNICTRAL
International Arbitral Tribunal, but also discusses its far-reaching
implications. It has been organised in seven sections. Section II introduces
preliminary facts about the case and its journey in various courts of India.
It depicts the cobwebs of legal complexities in the Indian judicial system.
Section III briefy discusses the crucial issues before the Tribunal and also
the operative part of the Award. Section IV outlines the deliberations
before the Tribunal as well as the fndings of the Tribunal on the main
contention that the time taken by the Indian courts amounts to denial
of justice, which is a breach of obligations of India under international
law. Section V is devoted to a detailed description of the reasoning of the
Jindal Journal of Public Policy, Vol. 1, Issue 1 236
court for giving the Award, including obligations of the effective mean
standard laid down by the Chevron Tribunal. In Section VI, the paper gives
an account of legalistic arguments against the Award and the challenges
emerging from this Award for India. Section VII contains the conclusions
as also a discussion on the message of the Award for the Indian State, in
general, and the higher judiciary, in particular.
Preliminary Facts
On 29 September 1989, White Industries Australia Ltd. (hereinafter,
White) entered into a contract for the supply of equipment and turnkey
development of a coalmine at Piparwar (now in the state of Jharkhand
in India) with Coal India Limited (hereinafter, Coal India). The contract
was governed by Indian law. It contained an arbitration clause requiring
the parties to arbitrate all disputes under the ICC Arbitration Rules, and
the said contract specifcally purported to exclude the operation under
the Indian Arbitration Act, 1940.
7
The contract provided for payment of
bonus/penalty commensurate with the performance targets.
Disputes arose between Coal India and White in relation to levy by Coal
India of penalty as mentioned under the contract. On Whites failure to
make payment of the net penalty in time, on 23 March 1998, Coal India
invoked the Performance Bank Guarantee of White to the extent of
the penalty amount. A number of other related technical disputes arose,
primarily concerning the quality of the washed and processed coal.
Since the parties could not settle the dispute amicably, White fled a request
for arbitration with the Secretary General of the ICCs International Court
of Arbitration (ICA) in July 1999.
8
The Tribunal, in its award dated 27
May 2002, ruled in favour of White with Justice Reddy dissenting. It held
that in total (including the bank guarantee amount), White was entitled to
Australian $ 4,085,180 and interest at 8 per cent per annum.
The Court Journey
Coal India challenged the Award by fling an application before the High
Court at Calcutta on 6 September 2002, for setting aside the Award.
White, on its part, fled execution proceedings in the Delhi High Court
on 11 September 2002 and on coming to know of proceedings before
the Calcutta High Court, questioned the jurisdiction of the Calcutta High
Court.
On 24 October 2002, White fled an application in the Supreme Court of
India to transfer Coal Indias application from the Calcutta High Court
to the Delhi High Court. In addition, White applied for an order that the
Calcutta High Court proceedings be stayed. Both the Single Judge and
Dispute Settlements and International Aribtration 237
later the Divisional Bench of the Calcutta High Court upheld the point of
jurisdiction, against which White fled a Special Leave Petition before the
Supreme Court on 31 July 2004. The Court heard it and tagged it with the
related petition already before it.
On 9 March 2006, the Delhi High Court directed that Whites enforcement
petition be stayed sine dine, with leave to White to revive the execution
proceedings upon the decision of the Supreme Court or the High Court
of Calcutta. Mr. Justice Lokur of the Delhi High Court was of the view
that it would not be in the interest of justice to invite conficting decisions
between the Calcutta High Court and the Delhi High Court (this was a
possibility, because when it granted Whites leave to appeal application, the
Supreme Court refused to stay the set-aside petition in the Calcutta High
Court). White did not appeal this decision.
On 16 January 2008, the Supreme Court referred the matter to another
bench of the three judges, presided over by the Chief Justice of India,
given the complexity of the issue involved. The proceedings in the two
High Courts are presently in suspended animation, resulting in a legal
imbroglio wherein the Award, dated 27 May 2002 is sub-judice in three
Indian Courts including the Supreme Court. In the meantime,
9
White
invoked arbitration against the Republic of India under the Agreement
between the Government of Australia and the Government of the
Republic of India on the Promotion and Protection of Investments dated
29 February 1999.
10
Before the Tribunal
The Tribunal framed seven issues to be considered including the
preliminary issues of its competence to decide the impugned issue. The
crucial issue was whether White as an investor has made an investment in
India pursuant to BIPA. The Tribunal also decided to determine whether
India has breached Article 3(1),
11
Article 3(2),
12
Article 4(2),
13
Article 7,
14

and Article 9
15
of the IndiaAustralia BIPA. Finally, the Tribunal was also
to determine whether White is entitled to receive compensation in case of
any breach of investment agreement.
Coal India forcefully denied applicability of BIPA, as the disputed
investment was made much before BIPA came into existence, and secondly
under the dispute settlement mechanism, there is no window available for
dispute between commercial entities unless the actions of Coal India can
be attributed to the Government of India. The Tribunal ruled that the
issue before it is not one of retroactivity because there is nothing in the
BIPA which requires a dispute to have arisen after the entry into force
Jindal Journal of Public Policy, Vol. 1, Issue 1 238
of the BIPA. The BIPAs temporal restrictions refer to investments and
not a dispute, as under Article 2(1),
16
the BIPA applies as long as there are
investments existing at the time of entry into force.
17
The Order
While deciding that it had jurisdiction in the matter, the Tribunal
concluded that White is an investor which has made an investment as per
the provisions of the IndiaAustralia BIPA. It, however, held that there
has been no breach by India of obligations under Article 3(1), Article 3(2),
Article 7, and Article 9.
However, it ruled that the Indian judicial systems inability to decide Whites
jurisdictional claim in over nine years, and in particular, the Supreme Courts
inability to consider the claim for about fve years amounts to undue delay. This
constitutes a breach of Indias obligation to foreign investors of providing
effective means of asserting claims and enforceable rights under Article 4
(2) of the IndiaAustralia BIPA. This inference was done by reading Article
4(5) of the IndiaKuwait BIPA into the instant case on the premise of the
Most Favoured Nation (MFN) treatment. Since the ICC Award is enforceable,
White is entitled for compensation so as to restore it to the position that it
would have enjoyed had the above breach of BIPA not occurred.
The Tribunal ordered India to pay damages to White to the tune of
Australian $4,085,180 plus $84,000 for the fees and expenses of arbitrators
and Australian $500,000 for arbitral expenses. All these payments have to
be made with an interest of 8 per cent per annum from 24 March 1998,
until the date of payment.
18
The Contentions
The major contention of White was that by entertaining the application
of Coal India to set aside the Award, the Courts of India have asserted the
jurisdiction to set aside an international arbitration award made in another
country, in breach of international law under which an international
arbitration award may be set aside only by the courts of the place where
the award was made.
19
White pleaded that even on a issue of limited jurisdiction, the matter
has been dragging for years and there is no evidence to suggest that the
matters would be dealt with expeditiously in the near future. It specifcally
mentioned that having already applied for and obtained an order for
expedited hearings in 2006 and 2007, there was no effective course open
to White to seek to expedite the appeal further. This, according to them, is
suffcient to shock or surprise a sense of judicial propriety and constitutes
denial of justice.
Dispute Settlements and International Aribtration 239
White further challenged the delay by connecting it with the denial of fair
and equitable treatment under Article 3(2). It also submitted that it has
long been recognised that the fair and equitable treatment requirement in
international law requires the host State to provide to investments treatment
that does not affect the legitimate expectations which the investor had at
the time of making the investment.
20
It was emphasised that the resulting
protection is unqualifed, including reference to domestic law.
White went on to argue that the relevant standard for denial of justice must
be informed by the obligations voluntarily accepted as binding by India
under the Convention of the Recognition and Enforcement of Foreign
Arbitral Awards 1958, popularly known as the New York Convention.
21
By
reason of Articles III and V of the New York Convention, and in the light
of its object and purpose, there is a strong presumption in favour of the
enforcement of arbitral awards. Consequently, White contented that this
fundamental principle of international law is also refected in Article 27 of
the Vienna Convention on the Law of Treaties 1969.
22
India Says That There Is No Denial of Justice
India contended that the factors to be taken into account in determining
whether there has, in the present case, been a denial of justice are: (a) the
complexity and sensitivity of the proceedings, as well as the signifcance of
the issues at stake; (b) the need for swiftness in the resolution of the case,
including whether the claimant may be compensated for loss by any delays;
(c) the conduct of the litigants involved, including the diligence of the
claimant in prosecuting the proceedings; (d) the behaviour of the courts
themselves; and (e) the circumstances of the host State.
23
India denied denial of justice on account of the ground that the matter is
awaiting determination before the Supreme Court on a preliminary point
of jurisdiction and that the progress has been hampered by the complexity
of the issue, as the question whether the Indian Courts can entertain an
application for an arbitral award to be set aside, where that award was not
made in India, has been and is a hotly debated point of Indian arbitration
law and for this reason it was referred to a three-Judge Bench. The further
contention of India was that the time that has been taken is due to the
claimants litigation strategy.
India also advanced the logic that in any event, delay is a natural, well-known
and entirely predictable feature in the Indian court system. India wanted the
Tribunal to appreciate the burden of a legal system in a huge developing
country with a population of over 1.2 billion people and an over-stretched
judiciary, calling for application of standards different than, for example,
Switzerland, the United States or Australia. It refects no illegitimate conduct
Jindal Journal of Public Policy, Vol. 1, Issue 1 240
directed at White. White knew, or ought to have known, that Indian law
allowed and allows a challenge to an arbitral award rendered outside India.
The Indian courts in this case have simply applied bona fde Indian law, as it
would be applied to anyone else, and as they are obliged to do
It was also forcefully argued by India that the swiftness of proceedings
in a commercial dispute cannot be equated with the need for an urgent
resolution of, say, human rights cases or a criminal trial.
No Denial of Justice, the Tribunal Agrees
The Tribunal proceeded to examine the issue with reference to the two-
stage proceedings, namely, at the High Court and the Apex Court. It
observed that it is true that the Delhi Court was generous with Coal India
when it extended deadlines for several pleadings, but this accounts for only
several months of the three-and-a-half years. Moreover, the length of the
time at the Delhi High Court seems to have been attributable both to the
exigencies of a busy court docket and the availability of counsel (both
sides sought and were granted adjournments to accommodate on several
occasions). It further considered that the proceedings in the Calcutta
High Court moved at a not unreasonable pace in the context of a denial
of justice assessment. The Tribunal, therefore, concluded that Whites
application was being strenuously defended and the pleadings schedule
was not exceptional, either in the Indian context or otherwise.
The Tribunal accordingly decided to focus on the delay that has resulted
from the Supreme Courts failure to constitute an appropriate panel to hear
Whites jurisdictional appeal, that is, just less than four years. However,
taking a view that while the duration of the proceedings overall, is certainly
unsatisfactory in terms of the effcient administration of justice, it is not
particularly surprising, or shocking, in the Indian context, that the Supreme
Court has not disposed of the matter. Nor does the delay raise concerns
with the Tribunal as to the judicial propriety of the outcome.
The Tribunal observed that though the delay is regrettable, there is no
suggestion of bad faith, and accordingly it does not amount to a particularly
serious shortcoming or egregious conduct that shocks or at least surprises,
a sense of judicial proprietary.
24
Accordingly, the Tribunal concluded that
Whites Article 3(2) case based on a denial of justice must fail.
Turning next to the need for swiftness, the Tribunal conceded that though
commercial matters cannot properly be allowed to languish, yet the
urgency of resolution is not as profound as in a criminal proceedings case
or in an application before the human rights courts, more so as the Award
contained an order for the payment of interest.
Dispute Settlements and International Aribtration 241
The refusal of White to appeal against the decision of the stay granted by
the Delhi High Court
25
went against them. The Tribunal noted that India
has shown the availability of local remedies. Given that White chose not
to appeal, it was, therefore, for it to show that such an appeal would have
been ineffective or futile. Hence, the further delay of six years is to be
disregarded in its assessment of whether India failed to provide to White
an effective means of enforcing its rights under the Award. The Tribunal
dismissed Whites argument that undue delay in the administration of justice
has been held to be a good reason for not exhausting local remedies.
26
As regards an expectation for transparency in court proceedings, the
Tribunal observed that there is again simply no evidence to support either
such an expectation as being reasonably legitimate, or to show a suffcient
lack of transparency to found a breach. It agreed with Indias argument
that lack of speed does not equate with lack of transparency.
Then What Went against India?
Having ruled that India is not in breach of any of the substantive provisions
of the IndiaAustralia BIPA, the Tribunal was swayed by the argument
of White that they should be given the advantage of a more favourable
provision, namely, Article 4(5) of the IndiaKuwait BIPA, which talks
about effective means of ascertaining claims and enforcement rights with
respect to investment.
Article 4(5) of the IndiaKuwait BIPA provides that:
Each Contracting State shall maintain a favourable
environment for investments in its territory by investors
of other Contracting State. Each Contracting State shall in
accordance with its applicable laws and regulations provide
effective means of asserting claims and enforcing rights
with respect to investments and ensure to investors of
other Contracting State, the right of access to its courts of
justice, administrative tribunals and agencies, and all other
bodies exercising adjudicatory authority, and the right to
employ persons of their choice for the purpose of the
assertion of claims and the enforcement of rights with
respect to their investments.
The IndiaKuwait BIPA came into force on 25 June 2003, much later than
the IndiaAustralia BIPA. White followed treaty shopping and sought
the advantage of Article 4(5) of the IndiaKuwait BIPA on the principal
of MFN terms.
27
The case of White was that the applicant was acting to
enforce [its] rights in connection with the Award and that being the case,
India was under an obligation to ensure that it had effective means to deal
Jindal Journal of Public Policy, Vol. 1, Issue 1 242
with its interests in each of the two proceedings.
28
After having rejected the plea for denial of justice on account of it being a
stringent one
29
and highly fact-sensitive, the Tribunal proceeded to examine
application of the effective means standard as elaborated by the Chevron
tribunal.
30
The same is summarised as follows:
(a) The effective means standard is lexspecialis and is distinct and a
potentially less demanding test, in comparison to the denial of justice in
customary international law;
(b) The standard requires both the host State to establish a proper system
of laws and institutions and that those systems work effectively in any
given case;
(c) A claimant alleging a breach of the effective means standard does not
need to establish that the host State interfered in judicial proceedings to
establish a breach;
(d) Indefnite or undue delay in the host States courts dealing with an
investors claim may amount to a breach of the effective means standard;
(e) Court congestion and backlogs are relevant factors to consider, but
do not constitute a complete defence. To the extent that the host States
courts experience regular and extensive delays, this may be evidence of
a systemic problem with the court system, which would also constitute a
breach of the effective means standard;
(f) The issue of whether or not effective means have been provided by the
host State is to be measured against an objective, international standard;
(g) A claimant alleging a breach of the standard does not need to prove
that it has exhausted local remedies. A claimant must, however, adequately
utilise the means available to it to assert claims and enforce rights. It will be
up to the host State to prove that local remedies are available and up to the
claimant to show that those remedies were ineffective or futile;
(h) Whether or not a delay in dealing with an investors claim breaches the
standard will depend on the facts of the case; and
(i) As with the denial of justice under customary international law, some
of the factors that may be considered are the complexity of the case, the
behaviour of the litigants involved, the signifcance of the interests at stake
in the case, and the behaviour of the courts themselves.
The Tribunal considered this description of the effective means
Dispute Settlements and International Aribtration 243
standard to be equally appropriate for application in the instant case.
Even though the Tribunal decided that the nine years of proceedings
in the set aside application do not amount to a denial of justice, it
concluded that the Indian judicial systems inability to deal with Whites
jurisdictional claim over such a long period, and in particular, the
Supreme Courts inability to hear Whites jurisdictional appeal for over
fve years amounts to undue delay and constitutes a breach of Indias
voluntarily assumed obligations of providing White with effective
means of asserting and enforcing rights.
This essentially means that Article 4(5) of the IndiaKuwait BIPA has
been read into the provisions of Article 4(2) of the BIPA between India
and Australia. India contested this position on the ground that doing so
would: (a) fundamentally subvert the carefully negotiated balance of the
BIPA with Australia; and (b) be contrary to the emphasis in the BIPA
on domestic law. It also stated that any alleged delays that occurred prior
to the date of Article 4(5) of the IndiaKuwait BIPA coming into force
cannot be taken into consideration in determining whether India breached
the alleged effective means obligation.
The Tribunal denied the Indian contention on the following grounds:
a) White is not seeking to put in issue the dispute resolution provisions of
the IndiaKuwait BIPA but is instead availing itself of the right to rely on
more favourable substantive provisions.
b) This does not subvert the negotiated balance of the IndiaAustralia
BIPA. On the contrary, it achieves exactly the result which the parties
intended by the incorporation of an MFN clause in their investment
agreement.
c) That the protection of Article 4(5) of the IndiaKuwait BIPA is in no way
contrary to the strong emphasis on domestic law 9.7 The Tribunal, on one
hand, was clear that the actions and/or omissions of Coal India cannot be
attributed to the Government of India but at the same time, it was equally
categorical that the actions and/or omissions of courts in India are directly
attributable to the Government as courts are organs of the State.
How the Award Has Been Received in India
31
After losing twice, the pragmatic view in India is that Award should be
implemented.
32
Any further agitation may not be legally possible and
moreover, prohibitive costs are involved in pursuing the litigation in a
foreign land. However, it would be fair to report that many Indian experts
are disturbed, as many questions remain unanswered.
Jindal Journal of Public Policy, Vol. 1, Issue 1 244
There is a view that the dispute settlement mechanism under BIPA can
only be invoked if Indian jurisdiction has not been resorted to. In this case,
admittedly parties preferred the local jurisdiction and then suddenly White
went to the arbitral ad hoc Tribunal despite the matter still being before
the Supreme Court. The implications of this trend need to be examined
carefully. This may lead to a situation of challenging the pending investment
disputes in Indian courts before international arbitration tribunals. There
is an imperative need for explicit provision concerning such a situation in
future BIPAs.
Apart from holding that White is an investor in India,
33
within the meaning
of BIPA, the Tribunal ruled in favour of India on all substantive issues
concerning the alleged breach of BIPA provisions. The fnal outcome,
however, still went against India on account of decision of the Tribunal
to extend to White the more favourable standard agreed to in the India
Kuwait BIPA on account of the MFN treatment.
It is regarded that non-discrimination among the foreign investors is
the core element of the MFN clause. In order to establish violation of
MFN, there should be a glaring discrimination practised by Indian courts
in enforcing foreign arbitral awards. Further, in order to invoke the MFN
clause, there should be a proven discrimination among foreign investors.
Since there is no discrimination and delay in the enforcement of foreign
arbitral awards which is alike to all foreign investors, it cannot be considered
as an MFN violation, as long as it is in accordance with India law. Delay
(temporal element) by national courts in accordance with Indian law cannot
be considered as a violation of the MFN obligation by India.
Another case of concern is that the Tribunal has kept the issue of
expropriation open, as according to it, the stage has not come for adjudication
by the Tribunal since the courts in India are still seized of the matter.
The Tribunal also made it clear that investment made in accordance with
national laws does not exclude supremacy of international law. If setting
aside of a foreign tribunal award is considered to be an expropriation
34
, it
has tremendously serious implications for India where the law position on
the issue is far from settled.
35
Conclusion
There are two-fold lessons that one can derive from this Award. Firstly,
the higher judiciary has to be sensitised to move out of the inordinate slow
judicial litigation rigmarole and take up these matters with more urgency
and seriousness,
36
and secondly, the policy-makers have to seriously ponder
over a negotiation text that ring fences Indias interest. Vague, broad,
inconsistent, and inadequately drafted provisions will defeat the interests
Dispute Settlements and International Aribtration 245
of India, particularly in the realm of regulatory domain. A vast plethora
of rich litigation jurisprudence of arbitral tribunals on investment treaty
disputes and recent attempts by various countries to revise their texts
should serve as good reference. Only careful and informed negotiators
can safeguard the Indian position. It is conceded that the prescription is
easier said than done but the action cannot brook delay, lest we are again
found wanting before another Tribunal.
The Wake-up Call
It is ironically interesting to note that even to execute the 2011 Award
against India, White has no option but to seek the execution through
national courts once again. The same inordinate delay may resurface again
It is not much of a relief that the notoriously slow judicial system in India
has not amounted to denial of justice. It is only due to the reason that
the threshold for holding so is very stringent. However, the Tribunal has
succeeded in giving a stern message that a dilatory judicial administration
deprives the investor of effective means of asserting claims and enforcing
rights,
37
a legitimate aspiration of an investor while making an investment
The big million-dollar question is whether the higher judiciary will take
a call. For foreign investment to fow, particularly when there is a stiff
competition among the emerging economies to woo it, it is not enough
to have an independent judicial apparatus. It is equally essential that it be
predictable, accessible and effcient. Effciency in terms of speed is the bane
of the Indian judiciary. Although the Tribunal has been modest in saying
that delay does not amount to denial of justice, the net effect is exactly
the same. The dilatory judicial system, not to talk about the expense and
complications associated with it, is a cause of huge misery to the common
man. To an Indian, it appears to be neither shocking nor surprising that the
preliminary question of jurisdiction could not be settled in over nine years,
but no judicial system worth its salt can condone such a situation. It is a
source of embarrassment for the Government, particularly in the case of
disputes with foreign investors. If the higher judiciary in India takes note
of this judgment and takes a corrective course, it will more than adequately
compensate the loss of money to the Indian exchequer on account of
defeat in the case.
Jindal Journal of Public Policy, Vol. 1, Issue 1 246
Notes
1
72 of them have entered into force, as on 12 March 2012.
2
The investment dispute with Enron was settled out of court.
3
Proceedings held in London.
4
M/s Sistema Joint Stock Financial Corporation, Russian Federation (Sistema), the foreign
investor in M/s Sistema Shyam Teleservices Ltd., has sought the opportunity to attempt to
resolve the dispute through conciliation in accordance with Article 9 of the IndiaRussia
BIPA within six months of the notice, that is, 28 August 2012. It has alleged violation of
Indias obligations to promote and protect foreign investments (including, but not limited to,
the obligation to accord fair and equitable treatment) and has also alleged expropriation (direct
and/or indirect).
5
Approximately Rs. 70,000 crores.
6
The Norwegian frm entered the Indian market through its Singapore arm. India does not
have a BIPA with Norway.
7
Article 4.1 (Part III) of the Agreement provided that the Agreement was to be governed
by the laws in force in India except that the Indian Arbitration Act of 1940 shall not apply.
8
The Tribunal consisted of Mr. Max Abrahamson, Mr. Trevor Morling QC and Justice Jeevan
Reddy from India.
9
Interestingly, when the case was pending before the Supreme Court for fnal disposal, on
10 December 2009, White wrote to India, contending that by action of courts and by actions
of Coal India, India had breached its obligations under the IndiaAustralia BIPA and sought
negotiations between the parties concerned on 30 March 2010. No response was received by
White from India.
10
Article 12 of the said Treaty, inter alia, provides for reference of a dispute to an ad hoc tribunal
in accordance with the UNCITRAL Arbitration Rules, 1976, with certain modifcations. The
BIPA was signed after more than nine years of the contract in dispute.
11
It says that, Each Contracting Party shall encourage and promote favourable conditions for
investors of the other Contracting Party to make investments in its territory and that Each
Contacting Party shall admit such investments in accordance with its laws and investment
policies applicable from time to time.
12
It provides that investments or investors of each Contacting Party shall, at all times, be
accorded fair and equitable treatment.
13
Containing the Most Favoured Nation (MFN) clause, the Article lays down that a Contacting
Party shall, at all times, treat investments in its own territory on a basis no less favourable than
that accorded to investments of investors of any third country.
14
It endeavours to incorporate the rule of customary international law on expropriation.
15
It permits the funds of an investor of the other Contracting Party related to an investment in
its territory to be freely transferred, without unreasonable delay and on a non-discriminatory
basis.
16
It says that This Agreement shall apply to all investments made by investor of either
Contracting Party in the territory of the other Contracting party, whether made before or
after the coming into force of this Agreement.
17
Para 4.2.11 at p. 35 of the Award.
18
The date of the ICC Award was 23 March 1998.
19
White maintained that Coal India had earlier failed to take steps to set aside the award in
Paris, as it was entitled to do under the French law.
20
See, for instance, Tecnicas Medioambientable Tecmed vs. United Mexican States (2004) 32 ILM 133.
21
India became a signatory on 13 July 1960. It entered into force in India on 11 October 1960.
Dispute Settlements and International Aribtration 247
22
It provides that [a] party may not invoke provisions of its internal law as justifcation for its
failure to perform a treaty.
23
India relied on ICSID jurisprudence, without being a member of ICSID. Its other arguments
were based on the writings of various scholars of commercial litigation and investment law.
24
Para 10. 4.23 at p. 105 of the Award.
25
Order of Justice Lokur of 9 March 2006. Refer pare supra 3.4.
26
White quoted from Chittarajan Amerasinghes work, Local Remedies in International Law (2
nd

edition 2004) at 210 as the authority for this proposition.
27
The MFN provision obliges India to treat investments in its territory no less favourably than
the investments of investors of a third country.
28
Para 11.4.2 at p. 110 of the Award.
29
As stated by the Tribunal in Mondev International Limited vs. United States (ICSID Case No.
ARB (AJ)/99/2, Award of 11 October 2002), para 127.
30
Chevron Corporation and Texaco Petroleum Company vs. Ecuador (Partial Award on the Merits
of 30 March 2010) para 244, where undue delay of over 15 years by Ecuadors courts won
Chevron the arbitral award. Article II(7) of the USEcuador BIPA employs almost identical
wording to that in Article 4(5) of the IndiaKuwait BIPA, providing that each party shall
provide effective means of asserting claims and enforcing rights with respect to investment,
investment agreements and investment authorizations.
31
Based on informal consultations with senior offcers of the concerned ministries.
32
The time period for challenging the Award expired on 28 December 2011, 30 days after the
date of the Award.
33
Holding the award as an investment and consequently White as an investor, is supposed to
have paved the way for considering it as a dispute between the investor and the Contracting
Party, as provided in Article 12 of the IndiaAustralia BIPA. Article 12 deals with the
settlement of disputes between an investor and a Contracting Party.
34
The Tribunal also disagreed with Indias position that only intangible property is capable of
being expropriated. According to it, even all contractual rights, whether tangible or intangible,
are vulnerable to expropriation.
35
The Indian judiciary has not hesitated from exercising jurisdiction over foreign awards under
the Arbitration and Conciliation Act of 1996 of India.
36
The Ministry of Law has been contemplating the introduction of Commercial Benches in
the High Courts to consider such disputes in fast track mode. Unfortunately, the Bill was
withdrawn in the Winter Session of 2011 and there is a remote possibility of it becoming a
reality in the near future.
37
Emphasis supplied.