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Round-up of India Investment Treaty Arbitration

The latest addition to the string of investment treaty arbitrations against the Government of India resulting from the 2G spectrum scam appears to be a claim by the Loop Telecom investor, Khaitan Holdings Mauritius Limited ("KHML"). KHML has filed a claim of over US$ 1 billion claiming losses in relation to the 2G licences cancelled by the Indian Supreme Court on 2 February 2012. KHML claims that Loop Telecom paid a cash entry cost of approx. 1,500 crore (approx. US$ 244 million) for the 2G licences, and has sought the return of US$ 140 million that it invested in Loop, along with 12% interest, its share of lost shareholder returns estimated at over US$ 1 billion and loss of the market values of the licences said to be in excess of US$ 300 million. The arbitration has been filed pursuant to the provisions of the 1998 India-Mauritius Bilateral Investment Promotion and Protection Agreement. The arbitration has been filed under the UNCITRAL Rules and KHML has appointed Singapore-based Francis Xavier SC as its arbitrator.

In addition, Deutsche Telekom ("DT") has filed a notice of arbitration against India under the Germany-India bilateral investment treaty. This is an ad-hoc arbitration and DT has nominated US lawyer Daniel M. Price as its party-appointed arbitrator. This follows a separate BIT claim filed by three Mauritius entities, CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Limited and Telecom Devas Mauritius Limited (the "Mauritian Investors") against India. Both these claims stem from the Devas-Antrix dispute [Please find link here] arising from investments made by DT and the Mauritian Investors in a venture that had contracted with the marketing arm of India's space agency, Antrix Corporation Limited, to lease capacity on satellite based electromagnetic spectrum in order to provide multimedia services to Indian consumers. However, Antrix cancelled the contract, purportedly for security reasons, whilst DT and the Mauritian Investors claim the cancellation was due to the political backlash from the 2G spectrum scam.

As a result of the growing investment treatment arbitrations against India and the threat by Vodafone to commence arbitration under the investment agreement between India and the Netherlands. India has introduced provisions in the recently concluded bilateral investment protection and promotion agreement ("BIPPA") with the United Arab Emirates to ensure that only executive decisions can be challenged, and even in such cases, only within a stipulated period. The inclusions in the India-UAE BIPPA seem intended to protect the Indian government from international arbitration challenges based on Indian domestic legislative or judicial actions.

Jet Airways and Etihad Airways to agree to arbitration under Indian law

Jet Airways ("Jet") and Etihad Airways ("Etihad") have proposed to enter into a contract whereby Jet proposes to sell 24% of its stake to Etihad. The Foreign Investment Promotion Board has provided conditional consent for this deal based on certain riders. One of the conditions is that all shareholder disputes and disputes under the shareholder agreement would have to be adjudicated under Indian law (rather than English law, as previously proposed). The FIPB however stated that any other arbitration not in relation to shareholder disputes could be resolved via arbitration under English law.