The latest news on investment arbitration is the Cairns ISDS verdict against India. News of it here, here and here.
I had blogged about a similar case of Vodafone here. Now there is news about an appeal against the Vodafone Arbitral award.
Can an ISDS arbitration award be appealed against? is it an appeal on jurisdiction or a de novo review? Where does the provision to appeal against an arbitration award exist? In the investment treaty or elsewhere? The WTO has (or had till now) an appellate review mechains. However, ISDS cases do not have an appellate mechanism. The EU proposal to set up an Appellate mechanism is a movement in that direction.
So, then should the Vodafone arbitration award be appealed against.
Two contrary views have surfaced:
Yes, we should: Promod Nair and Shivani Singal have argued that India should appeal against the ISDS arbitral award in Singapore:
The seat of the Vodafone arbitration was Singapore and any challenge to the award will have to be brought before the courts of Singapore. Unlike other jurisdictions (such as Switzerland which accord a wide margin of deference to the decisions of investment tribunals), the courts of Singapore have not hesitated to set aside BIT awards in cases where an investment tribunal has exceeded its jurisdiction.
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India has an opportunity to challenge the Vodafone award in Singapore, which it should avail of. The time period for challenging an award is 90 days from the date of receipt of the award. The scope of consent to arbitration (including whether India has ceded jurisdiction to an ISDS tribunal to decide tax disputes arising out of the exercise of sovereign legislative power) is an important issue that needs to be finally settled - not least because it could have multi-billion dollar implications for India in respect of other cases involving challenges to India’s taxation measures by foreign investors.
At least two other investment arbitrations – commenced by Cairn and Vedanta respectively – where final awards are presently awaited, arise out of the same taxation measure that was held to be in breach of India’s obligation to accord FET protection under the India-Netherlands BIT in the Vodafone arbitration.
A favourable decision from the courts of Singapore in the Vodafone case could serve as a useful persuasive precedent for such other cases, and also uphold the government’s position that it has not ceded jurisdiction to ISDS tribunals to decide issues that go to the very core of legitimate exercise of legislative power by a sovereign State.
No, we shouldn't: Hiroo Advani and Tariq Khan have argued that India should not appeal for the following reasons:
In our view, India should not challenge the Award in view of fact that the Supreme Court had already decided the issue way back in 2012. Further, there are very thin chances of succeeding in the Appeal against the PCA Award considering the fact that Singapore has not entertained similar challenges in the past.
The appeal has two aspects: procedural (jurisdiction) issues and substantive. The substantive issues could re-open the entire gamut of issues related to sovereign powers to tax and the limits of state power vis a vis fair and equitable treatment. I am not sure if ta policy , retrospectivity and the extent of FET can be re-adjudicated in Singapore?
I am just curious to know if all the substantive aspects that have been argued in the arbitral award can be re-submitted before the Court in Singapore? Or will it be restricted to issues of public policy and jurisdiction? Will it be a de novo appeal? A piece on Singapore COurts and arbitral awards is interesting here. Does the India-Netherland BIT provide for an appeal? Is the basis of the appeal the UNCITRAL Model Law on Commercial arbitration? Can the BIT terms be re-interpreted by the SIpgapore Court?
This dispute just shows how complex and winding ISDS cases can be. From the domestic courts in India to an ISDS tribunal to a SIngapore Court now.
A lawyers paradise indeed.
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