India is yet to enforce the award of $7.16 million awarded by an arbitral tribunal in September 2018 against French shipping firm Louis Dreyfus Armateurs SAS relating to a failed cargo terminal contract at state-owned Kolkata Port Trust (now Syama Prasad Mookherjee Port Trust).
In October 2012, Haldia Bulk Terminals Pvt Ltd (HBT), a joint venture between Mumbai-listed ABG Infralogistics Ltd and Louis Dreyfus Armateurs, walked out of the facility at Haldia Dock Complex (HDC) just two years into its 10-year contract citing worsening law and order situation at the port.
Louis Dreyfus held 49% stake in the joint venture cargo-handling firm that started operations in 2010 by mechanising berths No 2 and 8 at HDC.
The joint venture was promoted by ALBA Asia Pvt Ltd, an Indian company majority owned by Louis Dreyfus Armateurs.
Louis Dreyfus invoked arbitration against the government under a bilateral investment protection treaty signed between India and France seeking to protect its investment in the terminal that collapsed before completing the full term.
LDA alleged that “India’s acts and omissions resulted in the premature termination of the contract”.
It sought $36,155,825 in compensation for breach of Treaty by India and another $4.5 million for moral and reputational harm caused by India’s breaches of the Treaty.
After protracted proceedings that stretched for more than four years, the three-member Arbitral Tribunal unanimously decided that the “France-India BIT (Bilateral Investment Treaty) excludes from the scope of protection indirect investments in which an investor owns less than 51% of an intermediate investment vehicle, wherever located”.
“As a result, LDA’s indirect investment in HBT, which was structured in such a fashion, is not entitled to protection under the France-India BIT, and claims regarding alleged State conduct with respect to that indirect investment falls outside this Tribunal’s jurisdiction to resolve,” the Tribunal concluded while dismissing LDA’s claims in an award on 11 September 2018.
It also ordered LDA to pay India $540,885.30, towards India’s share of the Tribunal and PCA (Permanent Court of Arbitration) costs of arbitration and another $6,626,971.85 towards India’s costs and expenses of legal representation and assistance.
“India is yet to take action to enforce the arbitration award including attaching the ships of Louis Dreyfus that routinely calls at Indian ports,” said an official with knowledge of the matter.
India’s approach was in stark contrast to the speed at which Cairn Energy Plc, the British oil and gas firm, is looking to enforce the $1.2 billion arbitration award it won in December last year against the government in a retrospective tax dispute. Cairn has sued national carrier Air India in a U.S. court to recover the money by attaching its assets.