Delhi High Court: Whether there is a threshold bar or inherent lack of jurisdiction with Indian courts to deal with BIT arbitrations; Whether the BIT arbitrations and suits relating to BIT arbitrations are governed by private international law or any other system of law including domestic law?


In the recent case of Union of India vs Vodafone Group Plc United Kingdom & Anr (CS(OS) 383/2017 & I.A.No.9460/2017, Date of Decision:  07th  May, 2018), the Delhi High Court dealt with a dispute arising out of Bilateral Investment Treaties. The case involves various crucial aspects of Indian law on jurisdiction of national courts, private international law, Bilateral Investment Treaties etc. The case is discussed below in brief:

Factual Matrix

Vodafone invoked the India-Netherlands BIT and filed a claim against the Union of India in connection with the tax demand raised against it in relation to its $ 11 billion deal to acquire the stake of Hutchison Telecom. While the first investment treaty arbitration proceeding under the India-Netherlands BIT was pending, Vodafone initiated a fresh arbitration, invoking the India-UK BIT. The submissions made by the parties and the Amicus Curiae are as follows:

Vodafone’s Contentions

Vodafone through eminent senior Indian lawyer Mr. Harish Salve raised the following contentions:

  1. That the National Courts of India inherently lacked the jurisdiction to entertain any dispute arising out of a Treaty between two sovereign countries. Nor did they have jurisdiction Ratione Personae i.e. over Vodafone.
  2. That the Courts could not interpret and/or enforce the provisions of Bilateral Investment Treaties as the law made such issues non-justiciable. As per Vodofone, the obligations under such treaties were not subject to domestic laws.
  3. That domestic law was not a defence to non-performance of the obligations under a treaty.
  4. That a State cannot plead provisions of its municipal law to escape international responsibility.
  5. That Legislative, judicial as well as executive acts are all capable of giving rise to State responsibility.
  6. That even when the obligations under a treaty overlapped with domestic law (for example the procedure under the internal criminal law, or specific laws enacted as measures to give effect to Treaty Obligations) and the domestic law involved the actions of National Courts, the action of the Courts themselves could be considered as a violation of the Treaty.
  7. That the dispute resolution procedure was an element of the bilateral treaty, and thus any conduct by a State whether by legislation, executive action or resort to a National Court which interfered with this process would in itself be a violation of the Treaty.
  8. That the Award in 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 (in this case, the arbitral tribunal found that as a matter of fact and law raising multiple claims under multiple treaties, amounted to abuse of rights) established that it was the Tribunal that was seized of an arbitration that should decide the issue of abuse of process. The Union of India had sought relief on the same ground from the tribunal in the given case as it had in the case of Orascome (Supra).
  9. That the Union of India had elected to seek relief from the tribunal, and without awaiting its orders, and without seeking its leave, moved the present Court for the same relief on the same grounds. Such a conduct disentitled the Union of India, under the principles of Indian national law, to relief by way of an interim injunction.

Foreign Cases Cited by Vodafone

  1. The Campaign for Nuclear Disarmament v. The Prime Minister of the United Kingdom, [2002] EWHC 2777
  2. H. Rayner (Mincing Lane) Ltd. Vs. Department of Trade & Industry & Ors., [1990] 2 AC 418 (House of Lords)
  3. SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, (ICSID Case No.ARB/01/13) Procedural Order No.2 dated 16 October 2002

Union of India’s Contentions

  1. That a National Court is required to exercise its jurisdiction in accordance with applicable domestic laws. Court has the jurisdiction under Indian law to prevent abuse of process, it cannot limit its jurisdiction or refuse to exercise its jurisdiction. That Delhi High Court should exercise its inherent jurisdiction to prevent abuse of process and grant an anti-arbitration injunction restraining Vodafone from continuing with the arbitration proceedings.
  2. That Delhi High Court had the subject-matter jurisdiction to grant an anti-arbitration injunction under Section 9 read with Order 39 Rules 1 and 2 of the Indian Code of Civil Procedure, 1908 and Section 38 of the Specific Relief Act, 1963, subject to the limitations contained in Section 41 of the Specific Relief Act, 1963.
  3. That Vodafone is no stranger to Indian jurisdiction and therefore, it could not contend that exercise of personal jurisdiction by Delhi High Court would be unfair or unreasonable in any manner.
  4. That the judicial action (of seeking anti-arbitration injunction) was not a breach of treaty obligations as it did not prevent Vodafone from pursuing its elected remedy under the India-Netherlands BIPA, but only prevented Vodafone from perpetrating an abuse of process by pursuing parallel, vexatious and oppressive proceedings under the India-United Kingdom BIPA.
  5. That judicial action could not amount to a breach of international law on the part of the concerned State, unless such judicial actions constituted denial of justice. That Delhi High Court must exercise its jurisdiction based on principles of Indian law and not on considerations relating to any alleged breach of International law.
  6. That the initiation of arbitration proceeding under the India-UK 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 Vodafone.
  7. That Vodafone had issued a notice of dispute to Union of India under the India-Netherlands BIPA. This action amounted to an election of remedy under the India-Netherlands BIPA by Vodafone and the consequence of such election was that Vodafone had to limit its remedy to the one available under the India-Netherlands BIPA.
  8. That Vodafone had not issued a notice of arbitration to Union of India under the India-United Kingdom BIPA for almost eighteen months and its only after realising that their chances in the arbitration proceedings under the India-Netherlands BIPA were bleak, that the Vodafone issued a notice of arbitration to Union of India under the India-United Kingdom BIPA.
  9. That Vodafone was always aware of the jurisdictional objection and it merely used such jurisdictional objection to get two chances at pursuing the same claim.
  10. That the UK entities and the Netherlands entity were in the same vertical corporate chain (all under the control of the Vodafone Group) and they complained of the same measures and the disputes notified to India as well as relief sought were identical in both the arbitrations. Therefore, it is a clear abuse of process.
  11. That the jurisdictional objection raised by the Union of India related to the admissibility / maintainability of specific claims under the India-Netherlands BIPA and such an objection was not a technical objection but in fact related to the substantive rights/scope of investor protection provided by the India-Netherlands BIPA. By commencing arbitration proceedings under the India-United Kingdom BIPA, Vodafone was not seeking to overcome a simple defect in jurisdiction, but was attempting to use the arbitration proceedings under the India-United Kingdom BIPA to get a second chance at pursuing the same claim in spite of a serious jurisdictional defect.
  12. That if Vodafone had elected to pursue a remedy under a specific treaty, then they must be held to proper consequence of such election and if Defendants were to lose the arbitration proceedings under the India-Netherlands BIPA on a jurisdictional objection or otherwise, then such an outcome should be the end of the matter.

Foreign Cases Cited by Union of India

  1. Inceysa Vallisoletana, S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26)
  2. Plama Consortium Limited v. Republic of Bulgaria (ICSID Case No. ARB/03/24)
  3. Phoenix Action, Ltd. v. The Czech Republic (ICSID Case No. ARB/06/5)
  4. IOAN Micula v. Romania (ICSID Case No. ARB/05/20)

Submission of the Amicus Curiae (Mr. Sumeet Kachwaha)

  1. That the agreement to arbitrate as mentioned in the investment treaty was like making a contract from an advertisement and such an advertisement constituted a binding unilateral invitation to invite offers that could be accepted by anyone who performed its terms. Consequently, the provisions in the bilateral investment treaty had given rise to the formation of a contract.
  2. Relying on British Caribbean Bank Limited v. The Attorney General of Belize [2013] CCJ 4 (AJ), the Amicus Curiae submitted that it was a part of the inherent jurisdiction of the court to prevent abuse of process of court. But the reason for which Vodafone is commencing the arbitration proceedings under the India-United Kingdom BIPA was the jurisdictional objection raised by the Union of India in the arbitration proceedings under the India-Netherlands BIPA.
  3. That the proceeding under the India-United Kingdom BIPA had been initiated by Vodafone as a direct consequence of Union of India’s position in India-Netherlands BIPA Arbitration that the said Tribunal lacked jurisdiction to decide tax issues.
  4. That Vodafone merely sought one route to arbitration and did not seek double recovery and therefore there was no abuse of process.
  5. That the absence of double recovery by Vodafone excluded the possibility of abuse of process.
  6. That 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’ as 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 whereas in sequential arbitration, the second tribunal would neither be like an appellate forum nor would it be bound by the first award.
  7. Quoting Mr. Justice Sundaresh Menon, the Chief Justice of Singapore, he submitted that the BIPA arbitrators are a fairly small and select group of specialised professionals from United States of America and Europe with experience in commercial law rather than in policy making.

Foreign Cases Cited by Amicus Curiae

  1. Carlill v. Carbolic Smoke Ball Co. [1891-94] All ER. Re 127
  2. British Caribbean Bank Limited v. The Attorney General of Belize [2013] CCJ 4 (AJ)

Response of Union of India to the Submissions of the Amicus Curiae

  1. The Union of India denied that Vodafone had commenced proceedings under the India-United Kingdom BIPA in response to a jurisdictional objection raised by Union of India and that Vodafone was aware of such jurisdictional objection as far back.
  2. That if Vodafone had elected to pursue the remedies under a specific treaty, then it must be held to the proper consequence of such election. To permit otherwise would be contrary to principles of good faith and doctrine of election which were recognized by domestic and international law.
  3. That the Amicus Curiae’s reliance on the decision in British Caribbean Bank Limited (supra) to contend that commencement of parallel proceedings was not per se vexatious, failed to consider that in the said case there were parallel proceedings before the National Courts under Municipal Laws and before an arbitral tribunal under an investment treaty. In the British Caribbean Bank Limited (supra) the relevant investment treaty did not contain an exhaustion of local remedies requirement and thereby contemplated parallel proceedings to such an extent.

Rejoinder submissions of Vodafone

  1. That the Indian Code of Civil Procedure did not create jurisdiction of a domestic Court. In present dispute where Vodafone was a resident outside India, the jurisdiction of an Indian Court would have to be established under principles of private international law.
  2. That the relief of an injunction was an action in personam and under the well-established rule of private international law all personal actions had to be filed in the Courts of the country where the Defendant resided.
  3. That the Courts were bound to follow domestic law and not respect international obligations was based on the fundamental proposition that “Courts apply domestic law and not international treaties.”
  4. 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.
  5. That the decisions relied upon by the Amicus Curiae were cases where the Courts had exercised jurisdiction based on the curial law of the arbitration agreement. Once the tribunal was constituted, the Courts of the seat of the tribunal would have competence to decide the issue of jurisdiction.


Whether the Indian court has jurisdiction over Vodafone and over the subject matter of dispute?

The Court held that it has jurisdiction both in personam and over the subject matter of the dispute because the cause of action partly arose within the jurisdiction of Indian Court and Vodafone had purposefully availed of Indian jurisdiction by making an investment in India, holding economic interests in India and carrying on business in India and from a reasonable and holistic perspective, Vodafone have to be considered as working for gain within the jurisdiction of Indian Court.

Whether there is a threshold bar or inherent lack of jurisdiction with Indian courts to deal with BIT arbitrations?

The Court held that 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

What   is   the   court‘s   approach   to   treaty obligations and how an international treaty is to be interpreted?

The Court cited Article 51(c) of the Constitution of India and its interpretation by the Indian Supreme Court in Commissioner of Customs, Bangalore Vs. G.M. Exports and Ors., (2016) 1 SCC 91 and held that even where India is not a party to an international treaty, rules of international law which are not contrary to domestic law are followed by the courts in this country. Further, where India is signatory and a statute is made pursuant to the said treaty, the statue would be given a “purposive” construction in favour of the treaty. Even if there is a difference between the language in the statute and the corresponding provision of the treaty, the statutory language should be construed in the same sense as in 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 manner that leads to the same result in all the signatory nations.

Whether the BIT arbitration agreement between the Union of India and Vodafone is itself a treaty?

The Court opined that 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 private investor to the ‘pedestal of a foreign State’. In fact, the assumption underlying the investment treaty regime is clearly that the investor is bringing up a cause of action based upon the vindication of its rights rather than those of its national State. 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

Whether the BIT arbitrations and suits relating to BIT arbitrations are governed by private international law or any other system of law including domestic law?

The Court held that though the BIPA constitutes an arbitration agreement between a private investor on the one side and the host State on the other, yet it is neither an International Commercial Arbitration governed by the Arbitration and Conciliation Act, 1996 (the Act) nor a domestic arbitration. The Court also took 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.

Whether the courts in India can restrain bilateral investment treaty arbitrations, which are oppressive, vexatious, inequitable or an abuse of the legal process?

The Court held that there is no unqualified or indefeasible right to arbitrate. The National Courts in India do have and retain the jurisdiction to restrain international treaty arbitrations which are oppressive, vexatious, inequitable or constitute an abuse of the legal process.

Whether filing of multiple claims by entities in the same vertical corporate chain with regard to the same measure is per se an abuse of the legal process or vexatious?

The Court held that there is no presumption or assumption that filing of multiple claims by entities in the same vertical corporate chain with regard to the same measure is per se vexatious. Proceedings could be vexatious where they are absurd. Since it is the case of the 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.

Whether consolidation of arbitration proceedings is an adequate answer to abuse of process by Vodafone?

The Court held that with the acceptance of Vodafone’s undertaking / offer to consolidate, the likelihood that the tribunal would make an order that would afford Vodafone’s double relief or impose a double jeopardy on the Union of India or pass conflicting awards is remote.

Whether in view of the constitution of the arbitral tribunal during the pendency of the proceedings, the suit in India has become infructuous?

The Court held that the cause of action for filing the suit in India was that the arbitral tribunal under the India-United Kingdom BIPA may be constituted without India being represented. The 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.

Further the Court also observed that any challenge to the jurisdiction of the arbitral tribunal [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 Union of India under the doctrine of kompetenz–kompetenz, has to raise the plea of multiple claims constituting an act of oppression before the same arbitral tribunal?

The Court held that whether the arbitrators under the India-United Kingdom BIPA choose to stay the arbitral proceedings properly brought before them, whilst related arbitration proceedings are pending is entirely a matter for them under the doctrine of kompetenz-kompetenz and the circumstance that arbitrators may do so cannot form an appropriate basis for the National Court to restrain the arbitration.

The Court also opined that it should apply the principle of kompetenz-kompetenz with full rigour as India-United Kingdom BIPA arbitral tribunal would be better placed to assess the scope of the two BIPA arbitration proceedings and the likelihood of parallel proceedings and abuse of process.

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