TMI Blog2018 (5) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... 253 of the Constitution empowers the Indian Parliament to make a law to give effect to International Treaties, yet the Parliament has not passed any specific legislation to give effect to BIPA Agreements. However, there is no statutory bar or case law relating to treaty obligation which creates an ouster of jurisdiction or threshold bar for Indian courts in relation to a bilateral investment treaty arbitration. Accordingly, there is no explicit or implicit ouster of jurisdiction of National Courts. This Court is of the opinion that the agreement to arbitrate between an investor and the host State which results by following the treaty route is not itself a treaty but falls in a sui generis category. In the present BIPA Arbitration, a contractual obligation and a contractual right is involved and therefore, there is no bar as to the subject matter of the dispute or as to the jurisdiction of the court to hear the present case. This Court is of the view that the intent of the BIPA is to afford protection to investors and such a purpose is better served if the arbitration agreement is subjected to international law rather than the law of the State. After all the rationale behind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where they are absurd. For instance, if having lost a BIPA arbitration on merits, the same investor invokes another BIPA arbitration for the same claim without having made any investment through the second foreign State; but it would not be so held where there are substantial reasons to bring the two sets of proceedings simultaneously - Since it is the case of the Plaintiff-Union of India that the claim under the Netherlands-India BIPA is without jurisdiction, invocation of another treaty by the parent company cannot be regarded as an abuse per se. The investment treaty arbitration between a private investor and the host State, which results by following the treaty route is not itself a treaty, but is sui generis and recognized as such all over the world. It has its roots in public international law, obligations of States and administrative law. As a species of arbitrations, it is of recent origin and its jurisprudence cannot be said to be settled or written in stone; far from it. Investment Treaty jurisprudence is still a work in progress - As the present case is not a commercial arbitration, the Act, 1996 shall not apply. This Court is of the view that in a situation where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration proceedings under India-UK Bilateral Investment Protection Agreement or continuing with it as regards the dispute mentioned by the Defendants in the Notice of Arbitration dated 24.01.2017. (c) Award costs of the suit in favour of the Plaintiff and against the Defendants; (d) Pass such other and further order(s) and/or direction(s) as may be deemed fit and proper in the facts and circumstances of the case. 3. On 09th January, 2018, the learned senior counsel for the parties stated that they did not wish to lead any evidence in the present case. Thereafter, at the request of the learned senior counsel for the parties, the matter was heard finally on the paper book and after treating all the documents filed by the parties as admitted documents. 4. Since the Defendants were objecting the jurisdiction of this Court to hear the present suit, they were asked to commence the arguments. SUBMISSIONS OF MR. HARISH SALVE, SENIOR COUNSEL FOR DEFENDANTS-VODAFONE GROUP 5. At the outset, Mr. Harish Salve, learned senior counsel for Defendants clarified that the Defendants did not, by their appearance in Court, accede to the jurisdiction of Indian Courts generally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enables the courts of the United Kingdom to resolve differences between different laws of different states, and a rule of public international law which imposes obligations on treaty states......However, one approaches the problem, the obligations sought to be imposed on the respondents....stem from the treaty and have no separate existence in domestic law without it.....One has only to envisage a dispute, possibly between the member states and the I.T.C. or possibly between the member states inter se, as to the scope and consequence of the authority so agreed to be granted. This must necessarily be a question of the effect of the treaty on the plane of international law and a domestic court has not the competence so as to adjudicate upon the rights of sovereign states.... Thus your Lordships are invited directly to embark upon the exercise of interpreting the terms of the treaty and ascertaining, on the basis of that determination, the rights of the members in international law and the consequences in municipal law of the rights so determined. I see no escape from Mr Pollock's submission that this directly infringes the principle of non-justiciability. 9. He pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned senior counsel for the Defendants further submitted that domestic law was not a defence to non-performance of the obligations under a treaty. In support of his submission, he relied upon Articles 26 and 27 of the Vienna Convention on the Law of Treaties, which are reproduced hereinbelow:- Article 26. PACTA SUNT SERVANDA Every treaty in force is binding upon the parties to it and must be performed by them in good faith. Article 27. INTERNAL LAW AND OBSERVANCE OF TREATIES A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. This rule is without prejudice to article 46. 12. According to him, the obligations of a State, under a bilateral or multilateral international treaty, are owed by a Sovereign State to one or more other Sovereign States. He submitted that a breach of treaty obligations was a violation of international law and the remedy for this wrong had to be found in international law. He contended that the two principles which had been unanimously accepted are that a State cannot plead provisions of its municipal law to escape international responsibility, and legislative, judicial as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction, including any objections with respect to the existence or validity of the arbitration clause or of the separate arbitration agreement. 2. The arbitral tribunal shall have the power to determine the existence or the validity of the contract of which an arbitration clause forms a part 16. Mr. Salve also submitted that the Plaintiff-Union of India's reliance in the plaint upon the Orascom TMT Investments S.a r.l. v. People s Democratic Republic of Algeria [ICSID Case No.ARB/12/35, Award dated 31st May 2017 to apply for an injunction had been dealt with in the Order of the India-Netherlands BIPA Tribunal dated 22nd August 2017. He stated that the Award in Orascom infact established that it was the Tribunal that was seized of an arbitration that should decide the issue of abuse of process. 17. Learned senior counsel for the Defendants stated that the conduct of the Plaintiff-Union of India was also significant in the context of the nature of the arbitration. He pointed out that the Plaintiff-Union of India had sought relief on the same ground (i.e. the second arbitration by the present Defendants being an abuse of process) from the tribunal consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SUBMISSIONS OF MR. SANJAY JAIN, SENIOR COUNSEL FOR PLAINTIFF-UNION OF INDIA 21. Per contra, Mr. Sanjay Jain, learned senior counsel for Plaintiff-Union of India submitted that the initiation of arbitration proceeding under the India-United Kingdom BIPA was an abuse of process because it was aimed at avoiding the consequence of the election of remedy under the India- Netherlands BIPA and sought to multiply arbitration proceedings to maximise the chances of success for Defendants. 22. He stated that in April 2012 the Defendants issued a notice of dispute to Union of India under the India-Netherlands BIPA. According to him, this action amounted to an election of remedy under the India-Netherlands BIPA by Defendants and the consequence of such election was that Vodafone International Holdings B.V. (hereinafter referred to as VIHBV ) had to limit its remedy to the one available under the India-Netherlands BIPA. He submitted that to permit otherwise would be contrary to the principle of good faith and the doctrine of election which were recognized by domestic and international law. [Arts. 26, 31(1) of the Vienna Convention on the Law of Treaties 1969; Inceysa Vallisoletana, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the same or related dispute in order to maximize its chances of success and that This strategy is highly prejudicial to a respondent, who is forced to defend multiple sets of claims before different arbitral tribunals rather than in a single arbitration. (B) Award in Orascom case (supra), wherein it was held, ....an investor who controls several entities in a vertical chain of companies may commit an abuse if it seeks to impugn the same host state measures and claims for the same harm at various levels of the chain in reliance on several investment treaties concluded by the host state.....does not mean that the host state has accepted to be sued multiple times by various entities under the same control that are part of the vertical chain in relation to the same investment, the same measures and the same harm....Where multiple treaties offer entities in a vertical chain similar procedural rights of access to an arbitral forum and comparable substantive guarantees, the initiation of multiple proceedings to recover for essentially the same economic harm would entail the exercise of rights for purposes that are alien to those for which these rights were established. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds BIPA arbitration proceedings and if that were to happen, it would obviate the need for arbitration proceedings under the India-United Kingdom BIPA. Consequently, according to learned senior counsel for Plaintiff-Union of India, the obvious and prudent route for both parties would be to conclude the arbitration proceedings under the India-Netherlands BIPA and then decide if further arbitration proceeding under a separate treaty was required at all. 29. Mr. Sanjay Jain stated that consolidation of arbitration proceedings would only legitimise an inherent abuse of process on the part of Defendants and would not provide any succour to Union of India since there would remain two claims under two different treaties and Union of India would still have to defend two claims on merits by filing separate pleadings and advancing separate arguments. 30. He further submitted that there would be no finality attached to even the consolidated arbitration proceedings as Defendants could exploit their corporate structure to ignite a third treaty claim. He emphasised that this Court, being a court of equity and good conscience, should not permit Defendants to take advantage of their own wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 9 CPC and Clause 9 of the Facilitation Deed providing that the courts in Singapore or any other court having jurisdiction over the parties can be approached for equitable relief could not oust the jurisdiction of the appropriate civil court conferred by Section 9 CPC...... 33. Mr. Sanjay Jain contended that as this Court has the jurisdiction under Indian law to prevent abuse of process, it cannot limit its jurisdiction or refuse to exercise its jurisdiction. He submitted that Article 21 of the UNCITRAL Rules did not stipulate a negative formulation of the kompetenz kompetenz principle that precluded a competent court (such as this Court) from exercising its jurisdiction to prevent abuse of process. He submitted that the Supreme Court in Chloro Controls India Private Limited Vs. Severn Trent Water Purification Inc. Others, (2013) 1 SCC 641 has rejected the concept of negative kompetenz kompetenz in the following terms:- 85. This is the position of law in France and in some other countries, but as far as the Indian law is concerned, Section 45 is a legislative mandate and does not admit of any ambiguity. We must take note of the aspect of Indian law that Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Raja and Sons Vs. Firm Hansraj Nathuram, (1971) 1 SCC 721 wherein the Court has held as under:- 8. The above remarks of the Board indicate that even a decree which is pronounced in absentem by a foreign court is valid and executable in the country of the forum by which it was pronounced when authorised by special local legislation. A decree passed by a foreign court to whose jurisdiction a judgment-debtor had not submitted is an absolute nullity only if the local Legislature had not conferred jurisdiction on the domestic courts over the foreigners either generally or under specified circumstances. Section 20(c) of the Code confersurisdiction on a court in India over the foreigners if the cause of action arises within the jurisdiction of that court.....The board itself had noticed that this rule of Private International Law is subject to special local legislation. Clause (c) of Section 20 of the Code provided at the relevant time and still provides that subject to the limitations mentioned in the earlier sections of the Code , a suit can be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises. There is no disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions in the bilateral investment treaty had given rise to the formation of a contract along the lines of reasoning adopted in Carlill v. Carbolic Smoke Ball Co. [1891-94] All ER. Re 127 and that it was this contractual right to arbitrate which the court needed to examine. 43. In support of his submission, he relied upon the judgment of the Caribbean Court of Justice, Appellate Jurisdiction in British Caribbean Bank Limited v. The Attorney General of Belize [2013] CCJ 4 (AJ) , wherein it has been held, Thus BCB, the investor, is not a party to the treaty but Article 8 makes a free standing offer which is accepted on submission of the dispute to arbitration and becomes a binding contract between the investor and the State party. The provision is clear and unambiguous. It evidences the intention of the State parties to provide private investors with the right to have the specified disputes settled by international arbitration. The plain wording of the article also demonstrates that there are no preconditions to the right to submit the dispute to international arbitration..... 44. Learned Amicus Curiae submitted that it was a part of the inherent jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and therefore there was no abuse of process. He emphasised that the absence of double recovery by Vodafone excluded the possibility of abuse of process. 47. He referred to three letters of Defendants dated 17th May, 2017, 17 th June, 2017 and 25th July, 2017 to contend that even before the suit was filed, the Defendants were always ready and willing and on their own made several offers for consolidation . 48. Mr. Sumeet Kachwaha stated that Plaintiff-Union of India‟s suggestion that both the parties should first finish the arbitration proceedings under the India-Netherlands BIPA and then decide if further arbitration proceeding under a separate treaty was required at all was not a prudent route . He contended that this solution would probably constitute a greater abuse of process as in parallel proceedings there can be at least some coordination between the two tribunals (say for instance for recording of evidence; selection of seat etc.), whereas in sequential arbitration, the second tribunal would neither be like an appellate forum nor would it be bound by the first award. Both the awards were likely to be challenged (perhaps in different forums) as well as par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be caught by the principle. xxx xxx xxx 22. The arbitrators, men and women often schooled and experienced in commercial law, find themselves having an unexpectedly weighty hand in shaping economic and monetary policy, tax incentives and perhaps even employment laws. From the perspective of the government, national policy and legislation will now have to be assessed for legality vis-a-vis the State's international treaty obligations, as interpreted by an autonomous, privately funded adjudicative body usually consisting of foreign nationals. This has the potential to constrain the exercise of domestic public authority in a manner and to a degree perhaps not seen since the colonial era. xxx xxx xxx 32. But who are the arbitrators to whom such important tasks have been entrusted? They tend mainly to come from a fairly small and select group of specialised and arbitrators principally from Europe and the United States with experience in commercial law rather than in policy making. They are often unlikely to be attuned to the nuances of domestic public interest of the countries affected by their awa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause of the inherent conflict within a conflict problem. Because disclosure depends on self-diagnosis, the decision to make such a disclosure may itself be against the self-interest of the arbitrator, if it were likely to result in foregoing a substantial fee. xxx xxx xxx 77. Fourth, we should examine the normative justification for arbitration providing a form of governance through its providing the platform for the emergence of substantive legal norms that govern states. In the field of investment arbitration, it might perhaps be justified on the basis that exposing States to such liability promotes transparency and accountability, as well as the enhanced protection of individual rights. But there is a need for a serious debate to take place as to whether the concepts of expropriation and fair and equitable treatment, which is what the treaties set out to protect in the first place, should extend as far as they now do. If we were all convinced that this global administrative law is fundamentally beneficial, then the next step would be to develop a rich jurisprudence to add flesh and texture to various aspects of the law. The principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plying proceedings and by reiterating its indefensible demand that India should withdraw its jurisdictional objection in the arbitration proceedings under the India- Netherland BIPA or face multiple proceedings. 54. Learned senior counsel for Plaintiff-Union of India reiterated that consolidation of arbitration proceedings would not prevent abuse of process, but would simply mask such abuse to the advantage of Defendants. He submitted that Union of India had not consented to defending multiple claims relating to same cause of action--whether before one tribunal or multiple tribunals. According to him, consolidation of arbitration proceedings would ensure that arbitration proceedings under the India- United Kingdom BIPA could be used to pursue the same claims relating to the same cause of action pertaining to the same economic harm. 55. Mr. Sanjay Jain stated that there was no contradiction between the positions taken by the Plaintiff-Union of India in the arbitration proceedings under the India-Netherlands BIPA and before this Court. He stated that the contention that the claimant in India-Netherlands BIPA had not made a qualifying investment did not suggest that Defendants h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State. According to him, no organ of the State could act in a manner that would deny a foreign investor the right to invoke the remedy by way of arbitration, which remedy in itself was a right under the treaty. He submitted that the Republic of India - the respondent in the arbitration that would commence could not act in its own interest and injunct a potential Claimant from bringing a claim. 59. He further submitted that a National Court could not interdict the invocation of treaty arbitration - for that would constitute preventing a national of a foreign state from invoking the provisions of a treaty. 60. Mr. Harish Salve lastly submitted that the decisions relied upon by the learned Amicus Curiae were cases where the Courts had exercised jurisdiction based on the curial law of the arbitration agreement. He submitted that once the tribunal was constituted, the Courts of the seat of the tribunal would have competence to decide the issue of jurisdiction. FACTS 61. Before proceeding further, this court is of the view that it is necessary to state the facts of the present case, which are as under:- (i) On 20th January, 2012, the Supreme Court of India vide its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that disputes relating wholly or mainly to taxation are excluded from the scope of the [Netherlands] BIPA and that the notices of dispute served by VIHBV to the Government of India under Article 9 of the BIPA are not valid as the alleged disputes are outside the scope of the BIPA . (v) On 13th March, 2014, the VIHBV in its reply stated, We note your view that the BIT excludes issues wholly or mainly related to taxation. We have advice from both Indian and International legal experts to the contrary. This difference of view is clearly of significance in seeking to find an amicable solution to the dispute. In the context of this dispute, the only body capable of resolving the issue would be an arbitration panel constituted according to the BIT. It would of course be entirely open to the Government of India to argue its point of view on the exclusion of taxation from the BIT, as on any other issue, before such a panel . (vi) On 17th April, 2014, the VIHBV served upon the Plaintiff a Notice of Arbitration under the India-Netherlands BIPA so as to commence arbitration proceedings in respect of the aforesaid tax liability. (vii) On 15th June, 2015, Defendants se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding consolidation, the letter stated questions of potential consolidation are a matter for future discussion between the parties and not the Appointing Authority and the same could only be addressed after the formation of the Tribunal under the India-United Kingdom BIPA. (xiv) On 08th June, 2017, Plaintiff-Union of India replied to President, ICJ and stated that the Vodafone Group wants you to brush aside any abuse of process concerns....so that they may implement their abusive litigation strategy . (xv) On 17th June, 2017, Defendants filed their detailed submission before the President, ICJ, placing reliance on the Orascam award and stated that the India-United Kingdom BIPA had been filed only because India took the position that the India- Netherlands BIPA provided no protection. The Defendants stated that the second arbitration was only to obtain at least one route to an arbitral forum , in circumstances where India was intent on blocking both routes completely . It reiterated that the Defendants did not seek double recovery. As to consolidation, the letter stated, The claimants remain amenable to discussing potential consolidation of the claims. Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust, 2017 (or earlier if the India-Netherlands BIPA Tribunal decided before) for awaiting the outcome of the aforesaid application. It was agreed by the Plaintiff-Union of India that if the request was not accepted, India will be forced to proceed itself with the appointment in this proceeding, reserving its position on the abuse of process issue and also on jurisdiction . (xxii) On 11th August, 2017, President, ICJ, informed the parties of his decision to defer any action regarding the appointment of a second arbitrator until 31st August, 2017 or till the decision of the India-Netherlands BIPA Tribunal (whichever was earlier). (xxiii) On 11th August, 2017, the Plaintiff-Union of India filed the present Civil Suit inter alia seeking declaration that the Notice of Arbitration dated 24th January, 2017 under India-United Kingdom BIPA and the proceedings initiated thereunder were an abuse of process and null and void. In para 60 of the plaint, it was averred, It is, therefore, apprehended from the letter dated 2nd August, 2017 of the President, ICJ, that he is likely to proceed to appoint an arbitrator if India continues to persist in its decision not to participate in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Claimants by Thursday 7 September, 2017 at the latest, with a copy to myself, of its appointment of an arbitrator in the case opposing Vodafone Group Plc and Vodafone Consolidated Holdings Limited to the Republic of India, I intend to proceed with the requested designation and will be likely to do so at any moment after the fixed time-limit. (xxvii) On 07th September, 2017, the Plaintiff-Union of India appointed its arbitrator for the India-United Kingdom BIPA Arbitration. (xxviii) On 27th September, 2017, the Defendants filed their response under protest to contest jurisdiction of this Court. (xxix) On 26th October, 2017, Defendants gave a suo moto proposal in Court stating they were agreeable to the same arbitrators who constituted the India-Netherlands BIPA Tribunal being appointed as the arbitrators in the second Tribunal, so as to secure efficiency and coordination between the two arbitrations. However, this offer was rejected by the Plaintiff-Union of India. (xxx) On 26th October, 2017, this Court, without prejudice to the rights and contentions of the parties, clarified that the representatives/counsel for the parties were free to participate in the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration would apply to the United Kingdom Tribunal to consolidate the two arbitrations and with consent of parties both arbitrations could be conducted before the same tribunal. However, this offer too was rejected by the Plaintiff-Union of India. (xxxiii) Thereafter, at the request of the learned senior counsel for the parties, the matter was heard finally on the paper book and after treating all the documents filed by the parties as admitted documents. (xxxiv) On 09th January, 2018, the learned senior counsel for the parties stated that they did not wish to lead any evidence in the present case. As a matter of abundant precaution, it was clarified vide order dated 08th March, 2018, that the present case had been heard on the following issues:- 1) Whether this court has jurisdiction over the defendant and over the subject matter of dispute? 2) Whether there is a threshold bar or inherent lack of jurisdiction with this Court to deal with BIT Arbitrations? (i) Whether the BIT arbitration agreement between the plaintiff and the defendant is itself a treaty? (ii) What is the court s approach to treaty obligations and how an international treaty is to be interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the interpretations placed by arbitral tribunals on investment treaties. These treaties would often have been entered into at a time when States never expected to encounter such a flood of treaty based claims nor the sorts of interpretations being place upon these treaties. Striking examples of this include recent claims brought by tobacco companies against countries such as Australia and Uruguay in relation to the alleged indirect expropriation of intellectual property rights said to arise out of plain packaging legislation. Yet more recently, in While Industries Vs. India, a tribunal seated in Singapore held that pursuant to the MFN clause that was found in India's BIT with Australia, the Australian investor could take advantage of an effective means of enforcement obligation found in India's BIT with Kuwait and on that basis held India liable for failing to provide an effective means for the investor to enforce a commercial arbitration award it had obtained some ten years earlier against its local partner, an Indian state-owned enterprise. 15. This development has a real economic impact on the States. By way of illustration, after Argentina's econom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the courts to provide oversight is fragmentary and restricted: fragmented because enforcement of awards can be sought before the courts of any of the many signatories to the New York Convention, and restricted because of the principle of minimal curial intervention. (emphasis supplied) 65. Needless to state, these concerns have to be kept in mind by the Plaintiff-Union of India. COURT'S REASONING WHETHER THIS COURT HAS JURISDICTION OVER THE DEFENDANT AND OVER THE SUBJECT MATTER OF DISPUTE? 66. Section 20 CPC is the residuary clause which deals with the 'place of suing'. The said Section reads as under:- 20. Other suits to be instituted where defendants reside or cause of action arises. - Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction- (a) the defendant , or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain ; or (b ) any of the defendants , where there are more than one, at the time of the commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not sufficient for an assertion of jurisdiction ......... Petitioners' analogy does not wash. Whatever the status of their hypothetical welder, petitioners are not charged with mere untargeted negligence. Rather, their intentional, and allegedly tortious, actions were expressly aimed at California. Petitioner South wrote and petitioner Calder edited an article that they knew would have a potentially devastating impact upon respondent. And they knew that the brunt of that injury would be felt by respondent in the State in which she lives and works and in which the National Enquirer has its largest circulation. Under the circumstances, petitioners must reasonably anticipate being haled into court there to answer for the truth of the statements made in their article....... An individual injured in California need not go to Florida to seek redress from persons who, though remaining in Florida, knowingly cause the injury in California. 69. Even the jurisdiction in the international sense i.e. under private international law has been viewed from the point of view of internal competency of the Court and also competency in the eyes of international law by Justice M. Hiday ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is equally true, whether the proceedings lie in rem or in personam or in rem and also in personam. The opinion expressed by Story here is, in its turn, based on that of Boullenois in his Traite et de la Personnalite et de la Realite des Lois Coutumes ou Status, (1766) Vol. I, pp. 618-620. The law stated by Blackburn, J., has been universally accepted by all the Courts in the English speaking countries and it was quoted with approval recently by the Privy Council in Ingenohl v. Wingh on Co.... 70. Concurring on this point, the majority (per Justice J.C. Shah and Justice S.K. Das) has held, An action in personam lies normally where the defendant is personally within the jurisdiction or submits to the jurisdiction or though outside the jurisdiction may be reached by an order of the court ..... 71. It is pertinent to mention that the Defendants have themselves claimed in India-United Kingdom BIPA arbitration notice that they made a qualifying investment in the territory of India by virtue of their indirect majority shareholding in Vodafone India Limited as well as certain option rights in the said Company held through another indirect subsidiary. The Defend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case when a parent company owns all the shares of the subsidiaries, so much so that it can control every movement of the subsidiaries. These subsidiaries are bound hand and foot to the parent company and must do just what the parent company says. A striking instance is the decision of the House of Lords in Harold Holdworth Co. (Wakefield) Ltd. v. Caddies. So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one, and the parent company, DHN, should be treated as that one. So that DHN are entitled to claim compensation accordingly. It was not necessary for them to go through a conveyancing device to get it. 74. Accordingly, the Defendants No.1, 2 and VIHBV as well as its Indian subsidiary are one single economic entity. 75. Consequently, this Court has jurisdiction over the Defendants in personam and over the subject matter of the dispute. In Modi Entertainment Network (supra), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvention completely negates the role of National Courts. Consequently, there is no threshold bar insofar as the dispute is concerned. 79. Even if, one were to examine this issue dehors the Code of Civil Procedure, this Court is of the view that the India-United Kingdom BIPA holds out to investors on a standing basis the right to choose to submit the disputes for settlement by binding arbitration. The said treaty expressly provides the consent of the Indian State to submit any investment dispute for settlement by binding arbitration. [ See: British Caribbean Bank Limited (supra)]. 80. However, there is a distinction between an Inter-State arbitration and an Investor-State arbitration. Investors like the Defendants are not enforcing rights given to the United Kingdom, but are pursuing the rights in their name and for themselves claims against the other State party. The subject matter of the dispute between an investor and the host State is not the same as any dispute that may exist between two States. 81. If the agreement to arbitrate between a private foreign investor and the host State is held to be a treaty, it would amount to 'lifting the status ' of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned earlier in paragraph (2) of this Article; (ii) If the necessary appointments are not made within the period specified in sub-paragraph (b) (i), either party may, in the absence of any other agreement, request the President of the International Court of Justice to make the necessary appointments;...... ARTICLE 10 Disputes between the Contracting Parties (1) Disputes between the Contracting Parties concerning the interpretation or application of this Agreement should, if possible, be settled through negotiation. (2) If a dispute between the Contracting Parties cannot thus be settled within six months from the time the dispute arose, it shall upon the request of either Contracting Party be submitted to an arbitral tribunal. (3) Such an arbitral tribunal shall be constituted for each individual case in the following way. Within two months of the receipt of the request for arbitration, each Contracting Party shall appoint one member of the tribunal. Those two members shall then select a national of a third State who on approval by the two Contracting Parties shall be appointed Chairman of the tribunal. The Chairman shall be appointed within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efendants as it is a decision not of a Court, but of an ICSID arbitral tribunal to which the State had on any view agreed. This Court is of the opinion that an arbitral tribunal award passed by an Investment Treaty Tribunal does not carry the status of a precedent. There are several instances of an arbitral tribunal not considering itself bound by an award passed by another investment tribunal. Consequently, there is no reason for the National Courts to accord them the status of precedent. 86. Also as stated hereinabove, ICSID Tribunal decision is under auspices of ICSID convention, cornerstone of which is to exclude jurisdictions of the Courts. India has not acceded to this convention and it does not wish to dilute or surrender the National Courts jurisdiction which it may otherwise have. This being India's position, it would be fundamentally incorrect to embrace the ICSID jurisprudence of non-interventions by Courts , for that would be bringing in by the 'back door' , when the 'front door' has been shut! In these circumstances, this Court is of the opinion that it will not accept an ICSID or Investment award as having precedentary value. 87. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. A decision passes subsilentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. (Salmond on Jurisprudence 12th Edn., p.153). In Lancester Motor Company (London) Ltd. V. Bremith Ltd., the Court did not feel bound by earlier decision as it was rendered without any argument, without reference to the crucial words of the rule and without any citation of the authority . It was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur. The bench held that, precedents sub-silentio and without argument are of no moment . The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of such statute that are vague or ambiguous to have recourse to the terms of the treaty to resolve such ambiguity in favour of a meaning that is consistent with the provisions of the treaty. (3) In a situation where India is a signatory nation to an international treaty, and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them. (4) In a situation in which India is a signatory nation to an international treaty, and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(1)(a) defines treaty as an international agreement and governed by international law. (iii) Article 31(3)(c) provides as to the general rules for interpretation and states that a treaty shall be interpreted in good faith and in accordance with the relevant rules of international law. (iv) Article 27 states : A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. 99. It may further be stated that though India is not a signatory to the VCLT, several Indian decisions have referred to and relied upon the provisions of the same and the Supreme Court of India has held that the principles thereof provide broad guidelines as to interpretation of a treaty in the Indian context . Some of the relevant decisions in this regard are as under:- a) In Ram Jethmalani Ors. Vs. Union of India Ors., (2011) 8 SCC 1 the Supreme Court has held as under:- 69. Article 31, General Rule of Interpretation , of the Vienna Convention on the Law of Treaties, 1969 provides that a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... priation by the foreign State (which normally takes place through State Legislation). The treaty also involves a deliberate attempt to ensure for private investors the benefits and protection of consensual arbitration; and this is an aim to which the National Courts should, in an internationalist spirit and because it has been agreed at an international level, aspire to give effect. Even the Court of Appeal in Republic of Ecuador (supra) has held as under:- [33] Further, as Mr Greenwood [learned counsel for Occidental] accepts, the agreement to arbitrate which results by following the treaty route is not itself a treaty. It is an agreement between a private investor on the one side and the relevant state on the other. The question may then arise: under what law is that agreement to arbitrate to be regarded as subject, applying the principles of private international law of the English forum?.....All this being so, we would be minded to accept that, under English private international law principles, the agreement to arbitrate may itself be subject to international law, as it may be subject to foreign law. That possibility also appears to us to have been embraced as long a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same time under the same jurisdiction. But it would not be vexatious to bring an action in each country where there are substantial reasons of benefit to the plaintiff. There is no presumption that a multiplicity of proceedings is vexatious or that proceedings are vexatious merely because they are brought in an inconvenient place. 34. Proceedings may be restrained not only because they are vexatious in the sense of being frivolous or useless but also because they are oppressive. An example of oppression occurs where a litigant may be encouraged to pursue proceedings in a forum, having no connection with the subject matter of the dispute, by inducements of enhanced remedies including punitive damages . In normal circumstances, the widely recognized principle of forum non conveniens will apply but the court will restrain proceedings where a party acting under the colour of seeking justice acts in a way which necessarily creates injustice to others: see Castanho v Brown Root and Spiliado Maritime Corporation v Consulex Ltd. (emphasis supplied) 106. Broadly speaking, the doctrine of abuse of rights is founded upon the notion that a party may have a valid right, inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly been recognized by the International Court of Justice (ICJ) (See United Kingdom Vs. Norway, [1951] ICJ 3, France Vs. Norway, [1957 ICJ Rep 9], Liechtenstein Vs. Guatemala, [1955] ICJ 1 and Hungary Vs. Slovakia [1997] ICJ Rep 7). [See Article on Abuse of Process in International Arbitration by Professor Emmanuel Gaillard, published by Oxford University Press on behalf of ICSID, 2017]. 109. Similarly, the Indian Supreme Court in Modi Entertainment Network (supra) has held, The courts in India like the courts in England are courts of both law and equity. The principles governing grant of injunction - an equitable relief - by a court will also govern grant of anti-suit injunction which is but a species of injunction. When a court restrains a party to a suit/proceeding before it from instituting or prosecuting a case in another court including a foreign court, it is called anti-suit injunction .... 110. Being principles common to many national legal systems and recognized under public international law, the prohibitions of abuse of rights and abuse of process are recognized as general principles of law that are applied by courts and arbitral tribunal, irrespective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Model Law. Section 16 of the Act, 1996 incorporates Article 16 of the Model Law. 117. India has taken a far more restrictive approach in the context of International Commercial Arbitrations and in McDonald's India Private Limited Vs. Vikram Bakshi and Ors., 2016 (4) ArbLR 250 (Delhi) a Division Bench has held that the Courts do not have inherent power to issue anti arbitration injunction where Act, 1996 applies. In the opinion of this Court, the ratio in McDonald (supra) that there is no inherent power to Court to issue an anti arbitration injunction is clearly in the context of Act, 1996. In fact, last para of the said judgment makes it clear that the Court's ruling is in the context of Sections 5, 8 and 45 of Act, 1996. In a situation where the Act, 1996 does not apply, the Court's inherent powers are not circumscribed by anything contained in the Act and the ratio in McDonald (supra) will not apply. As this is not a commercial arbitration, the New York convention will not apply. 118. The Caribbean Court of Justice, Appellate Jurisdiction in British Caribbean Bank Limited (supra) has correctly held as under:- 39 ....... But once the validi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits, the same investor invokes another BIPA arbitration for the same claim without having made any investment through the second foreign State; but it would not be so held where there are substantial reasons to bring the two sets of proceedings simultaneously. 123. Since it is the case of the Plaintiff-Union of India that the claim under the Netherlands-India BIPA is without jurisdiction, invocation of another treaty by the parent company cannot be regarded as an abuse per se. 124. Upon an in-depth analysis of the Orascom Award, it is apparent that it does not hold that multiple claims by companies in a vertical structure under different treaties against same State measures will always be an abuse of rights. In fact, in the said case, the arbitral tribunal found that as a matter of fact and law raising multiple claims under multiple treaties, amounted to abuse of rights. 125. This Court is also of the view that it will not grant an injunction if by doing so it, deprives the Defendants of advantages in the foreign forum of which it would be unjust to deprive the Defendants. The fact that it may be inconvenient or expensive for Plaintiff-Union of India to litigate before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Plaintiff-Union of India. The consolidated proceedings would ensure that no relief is granted twice over and there is no conflict of awards. The consolidated proceedings would also ensure that there is no delay in rendering of the awards. 128. To conclude, the entire scheme of the BIPA is contractual and it is clear that Union of India consented to the international investment arbitration under principles of international law as the method of dispute resolution under the BIPA. Further, with the acceptance of Defendants‟ undertaking / offer to consolidate, the likelihood that the tribunal would make an order that would afford Defendants double relief or impose a double jeopardy on the Plaintiff-Union of India or pass conflicting awards is remote. WHETHER THE INJUNCTION ORDER DATED 22nd AUGUST, 2017 IS VITIATED ON THE GROUND OF SUPPRESSION? 129. This Court is of the view that every litigant must plead its case with full candour and in good faith. This duty is a notch higher if a party is asking for discretionary relief and, that too, at the ex parte stage. The Supreme Court in Morgan Stanley Mutual Fund Vs. Kartick Das, (1994) 4 SCC 225 has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or a conduct vitiated by malice. WHETHER IN VIEW OF THE CONSTITUTION OF THE ARBITRAL TRIBUNAL DURING THE PENDENCY OF THE PROCEEDINGS, THE PRESENT SUIT HAS BECOME INFRUCTUOUS? 133. The cause of action for filing the present suit was that the arbitral tribunal under the India-United Kingdom BIPA may be constituted without India being represented. The Plaintiff-Union of India has now appointed an arbitrator, and after the orders of the Supreme Court of India, the Chairman stands appointed by the two party-appointed arbitrators. The tribunal is complete. The challenge to the invocation has run its course. Any challenge to its jurisdiction [including any challenge to the validity of the invocation of arbitration on allegations of abuse] must lie before the Tribunal. This is in accord with the principle of kompetenz kompetenz which is recognised and accepted even under Indian domestic law. WHETHER THE PLAINTIFF UNDER THE DOCTRINE OF KOMPETENZ KOMPETENZ, HAS TO RAISE THE PLEA OF MULTIPLE CLAIMS CONSTITUTING AN ACT OF OPPRESSION BEFORE THE SAME ARBITRAL TRIBUNAL? 134. The principle of kompetenz-kompetenz , is recognised in Article 21 of the UNCITRAL Arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that too, without waiting for the award being rendered by the India-Netherlands BIPA Tribunal. After all, the present suit is not and cannot be an appeal against the India-Netherlands BIPA Tribunal. THANKS 141. Before parting with this case, the Court expresses its appreciation for the services rendered by Mr Harish Salve and Mr Sanjay Jain, Senior Advocates (as well as the team of lawyers that assisted them), for their able and lucid exposition of the law. This Court expresses its deep gratitude to the learned Amicus Curiae , Mr. Sumeet Kachwaha who not only spared his valuable time but who also despite the presence of eminent senior counsel, lifted the level of debate and rendered valuable assistance to the court on important questions of BIPA arbitration. CONCLUSION 142. To conclude, investment treaty arbitration between a private investor and the host State, which results by following the treaty route is not itself a treaty, but is sui generis and recognized as such all over the world. It has its roots in public international law, obligations of States and administrative law. As a species of arbitrations, it is of recent origin and its jurisprudence cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Of course, it is a matter of practice that National Courts will exercise great self restraint and grant injunction only if there are very compelling circumstances and the Court has been approached in good faith and there is no alternative efficacious remedy available. Such a restrictive approach and jurisdiction is in consonance with any international obligation, India may have under VCLT or any other treaty. 149. However, keeping in view the aforesaid findings vis-a-vis, the abuse of process, kompetenz kompetenz issues, the present suit and application are dismissed with liberty to the Plaintiff-Union of India to raise the issue of abuse of process before India-United Kingdom BIPA, that now stands constituted. The said Tribunal will decide this issue on its own merit, without being influenced by any observation made by this Court. 150. The Tribunal while deciding the said issue will take into account the Defendants' undertaking to this Court that if the Plaintiff-Union of India gives its consent, it would agree to consolidation of the two BIPA arbitration proceedings before the India-United Kingdom BIPA Tribunal. Accordingly, the ex parte interim order dated 22nd Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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