Enforcement of Investment Awards: Is India Anomaly in South Asia?

Pushkin Tandon,

Editorial Intern,


Sameep Khanal,

Managing Editor,

South Asian Journal of International Law by Internationalism.


In this article, the authors will analyse the investment awards under the Indian legislation and case laws. Authors will also try to contextualize Indian legislation in south Asia and draw parallels to the extent possible with south Asian experience in enforcing investment awards. Further authors will also try to explore options for providing much-required clarity on the enforceability of investment awards in India after Vodafone award.

Model BIT and Revisionism

The 2015 draft of a model Indian bilateral investment treaty (the “Model BIT”) contains stringent guidelines on the definition of investment amending the broader all-asset inclusive definition usually associated with first-generation BITs. Article 15.1 of the 2015 draft of a model Indian bilateral investment treaty (the “Model BIT”) contains stringent guidelines on the definition of investment amending the broader all-asset inclusive definition usually associated with first-generation BITs. Article 15.1 of the Model BIT provides that the investor must resort to the resolution of the dispute before the pertinent local courts or administrative bodies of the host state as a prerequisite to filing a claim seeking relief from the tribunal. Moreover, Article 15.2 elucidates that the investor must exhaust all judicial and administrative remedies linking to the measure fundamental to the claim for at least a period of five years erstwhile to arbitration. The provision has been retained in the Belarus BIT and Taipei BIT (2018). The provision is like article 26 of the ICSID Convention which requires the exhaustion of domestic administrative or judicial remedies as a condition of its consent to arbitration. However, despite significant headway in terms of substantive protection high courts ruling have not been helpful for streamlining investment awards in India.

There have been three instances of a national court in India adjudicating upon issues related to enforcement of investment awards. With the sanction of three judgments, courts have essentially lacked consensus on a vital aspect – the pertinence of the Arbitration and Conciliation Act, 1996 (the“Act”) to investment arbitral awards. With the sanction of three judgments, courts have essentially lacked consensus on a vital aspect – the pertinence of the Arbitration and Conciliation Act, 1996 (the“Act”) to investment arbitral awards arbitrations. The Calcutta High Court in Board of Trustees of the Port of Kolkata v. Louis Dreyfus Armatures(2014) (the “Louis Dreyfus”) continued under the assumption that the Act applies to investment awards. The High Court of Delhi recently in Union of India v. Khaitan Holdings (Mauritius)(January 29, 2019) and Union of India v. Vodafone Group plc(7th of May 2018) took a stand on the opposite, holding that the Act is only applicable to commercial arbitrations.

An often-overlooked repercussion of this discrepancy/dichotomy is severe ambiguity on the enforceability of investment arbitral awards in India. It is also to be noted that India is not a party to the ICSID Convention and is therefore under no obligation to authorise any decision given through investment arbitral awards as if they were final judgments of its own local courts, as provided for by Art. 54 of ICSID Convention. It has also availed of the reservation provided for in Art. I (3) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the“New York Convention”). Accordingly, S. 44 of the Act limits the New York Convention’s applicability in India to foreign awards stemming out of or rooted in legal relationships which are considered as ‘commercial’ under Indian law.

Contradictory Ruling

Loius Dreyfus decided by the Calcutta High Court the first case in 2014 which dealt with investment arbitration. It dealt with an appeal for an anti-arbitration injunction by the Kolkata Port Trust, averting Louis Dreyfus from ongoing proceedings against it and further directed them to an investment arbitral tribunal established under the India-France Bilateral Investment Treaty. The court approved the injunction, perceiving that the Kolkata Port Trust had been erroneously recognized as a respondent in the arbitration as the only party in agreement to the BIT for arbitration was the Union of India.

Section 45 of the Act was utilised towards the submission of this anti-arbitration injunction. When mitigating its authority to issue an anti-arbitration injunction, in this case, the court merely presumed that the Act was applicable to this investment arbitration, similar to the case with foreign-seated commercial arbitrations. It, therefore, deliberated on the position of anti-arbitration injunctions under Section 45 (which reads as to commercial arbitrations) and held that it would only be interference in foreign-seated investment arbitrations in rare situations, applying the same norm it applies when bearing in mind intrusion in commercial arbitrations under this provision.

Following this, the Delhi High Court decided on another request for an anti-arbitration injunction in Vodafone(7th of May 2018). Here, the Union of India requested that Vodafone Group plc be barred from resorting to arbitration under the India-UK BIT since another arbitration under the India-Netherlands BIT had already been introduced by its Dutch holding corporation, based on the same cause of action. In denying the application, the court made the contradictory assumption, while stating that the investment arbitration in the conflict was “not a commercial arbitration governed by the Arbitration and Conciliation Act, 1996”. It, therefore, created its own norm, adjudicating that an Indian court could intervene in investment arbitration and grant an anti-arbitration injunction only if the arbitration is “oppressive, vexatious, inequitable or constitutes an abuse of the legal process”. In Khaitan Holdings(January 29, 2019), the Delhi High Court had adopted this standard and made the same assumption again, bolstering a fundamental disagreement between the two High Courts on the Act’s pertinence to investment arbitrations.

The Delhi High Court's position leaves no alternative open to parties looking for the requirement of an investment arbitral award in India. In reality, regardless of whether the Delhi High Court's holding in Vodafone on the standards of India's Civil Procedure Code applying to Investment arbitrations is applied, it won't help parties at the authorization stage since decrees of unfamiliar courts (and not tribunals) can be implemented under that enactment.

Understanding Bottleneck: “Commercial Relationship”

In China, the New York Convention’s applicability to a dispute between ‘foreign investors and the host government’ has been overtly precluded through its embracing of the commercial association reservation under Art. I (3) of the Convention. While not provided explicitly, the interpretation of the reservation in Sec. 44 points to a high probability of similar stance being accepted in India.

In RM Investment & Trading Co. v. Boeing Company(10th of February 1994), The Supreme Court of India found that the New York Convention aims to facilitate the speedy settlement and is expected to encourage quick settlement of disputes arising out of international trade through arbitration and that therefore, “the expression commercial should be construed broadly, having regard for the manifold activities that are an integral part of international trade today”. It, thus, held that a contract or agreement entered into for consultancy services fell within the reservation’s scope and an award rendered in that manner could be enforced and upheld in India under the Convention.

While seemingly broad in its scope, this understanding of the reservation has still been limited to dealings amid individuals. Thus, in Union of India v. LiefHoegh Co.(1982), the High Court of Gujarat held that ‘commercial relationships’ in this milieu would contain “all business and trade transactions in any of their forms, including the transportation, purchase, sale and exchange of commodities between the citizens of different countries”.

While it would bring about a “pro-investment arbitration” result that would serve investor there is, lamentably, no clear premise on which the Calcutta High Court’s supposition on the Act’s material and applicability to investment arbitrations can be stretched out to the applicability of the New York Convention at the enforcement stage.

Vodafone Case

On September 25, 2020, the international arbitral tribunal constituted in the case of Vodafone International Holdings BV v. The Republic of India(2016) (Vodafone case) held that India had violated the ‘fair and equitable treatment’ (Vodafone award) guaranteed to VIHBV under the 1995 Bilateral Investment Promotion and Protection Agreement (BIPA) between the Republic of India and the Kingdom of Netherlands (India – Netherlands BIT).