India has executed the $7.16 million award issued against French shipping firm Louis Dreyfus Armateurs SAS (LDA) relating to a failed cargo terminal contract at state-owned Kolkata Port Trust.
This was confirmed by the government and Foley Hoag LLP, the U.S.-based law firm that acted as the counsel to the Indian government in the arbitration and the subsequent enforcement proceedings.
“India has already executed the $7.16 million award issued against LDA in the underlying arbitration through enforcement proceedings in France. LDA has settled the entire amount due under the award,” said Sudhanshu Roy, International Associate at Washington-based Foley Hoag LLP.
Officials in the ministry of ports, shipping and waterways said that LDA paid the award amount to the government in three tranches with the final instalment in October last year.
Premature termination of contract
In 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) of Kolkata Port Trust 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.
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” and sought compensation from the government.
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 fall outside this Tribunal’s jurisdiction to resolve,” the Tribunal concluded while dismissing LDA’s claims in an award issued 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.
Source : The Hindu Businessline
