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International Arbitration Forum

Khaitan Holdings (Mauritius) Limited v. Republic of India

Case summary

At a glance

Parties
Union of India (plaintiff) v. Khaitan Holdings (Mauritius) Limited, Loop Telecom and Trading Limited, Ishwari Prasad Khaitan, Kiran Khaitan and Ravikant Ruia (defendants). Underlying arbitration: Khaitan Holdings (Mauritius) Limited v. Republic of India
Case no.
CS (OS) 46/2019 (Delhi High Court); underlying arbitration PCA Case No. 2018-50
Court
High Court of Delhi at New Delhi
Forum and rules
Underlying arbitration: ad hoc arbitration under the UNCITRAL Arbitration Rules 1976, administered by the PCA; seat agreed as The Hague (according to the claimant's letter)
Treaty
India–Mauritius BIT (in force 20 June 2000)
Court
Justice Prathiba M. Singh (single judge)
Underlying award(s)
None yet. The arbitration was at its first procedural meeting (28 January 2019)
Sector
Telecommunications (UAS licences, spectrum)
Outcome
On 29 January 2019 the Court refused India's request for interim relief staying the BIT arbitration. It held that it had jurisdiction and that India had not acquiesced, but left the question of whether Khaitan Holdings is a genuine investor to the arbitral tribunal.
Amount
In the arbitration, Khaitan Holdings' notice of arbitration sought the return of about USD 140,000,000 invested, with 12% interest; its share of lost shareholder revenue (estimated in excess of USD 1 billion); and loss of licence market value (in excess of USD 300 million).

The dispute

Khaitan Holdings (Mauritius) Limited held 26.95% of Loop Telecom, an Indian company. Its predecessors were Capital Global Limited and Kaif Investment Limited. Loop Telecom had been granted 21 Unified Access Services (UAS) licences, which the Supreme Court of India cancelled on 2 February 2012 in Centre for Public Interest Litigation v. Union of India. Khaitan Holdings started arbitration under Article 8 of the India–Mauritius BIT, and India later sued in the Delhi High Court for an anti-arbitration injunction against Khaitan Holdings, Loop Telecom, Ishwari Prasad Khaitan, Kiran Khaitan and Ravikant Ruia. India argued that the investor was controlled by Indian citizens resident in Delhi and so was not a genuine foreign investor. It also argued that: the investment was subject to Indian law under the UAS licence regime; Loop Telecom had already used its remedies before the TDSAT; the claims overlapped; there was no expropriation because the licences were cancelled by the Supreme Court in the public interest; and the arbitration was oppressive and an abuse of process. Khaitan Holdings appeared under protest. It argued that India had delayed and acquiesced, that anti-arbitration injunctions may be granted only in the rarest of cases, and that the tribunal must rule on its own jurisdiction under Article 21 of the UNCITRAL Rules.

Key holdings

  1. The Court has jurisdiction over the suit under the Code of Civil Procedure, since the Arbitration and Conciliation Act 1996 does not apply to BIT arbitrations. The beneficial owners live in Delhi, Loop Telecom is incorporated in Delhi, and the cause of action has a real connection with India. ¶¶ 29–30, 35
  2. India had not acquiesced in the BIT arbitration. The notice of arbitration dated from 2013, but the arbitration was activated only in 2018, so India is not estopped from going to the domestic courts. Its questions about the links between the defendants are not mala fide or an abuse of process. ¶¶ 27–28
  3. Domestic courts may interfere in BIT arbitrations only in compelling circumstances and in rare cases. Continuing the arbitration is not per se contrary to public policy, because the State must honour its treaty commitments. ¶¶ 1, 47
  4. The BIT's definition of 'investor' has no exception for entities indirectly owned or controlled by nationals of the host State. Whether Khaitan Holdings is a genuine Mauritian investor, or Ishwari Prasad Khaitan posing as one, is for the arbitral tribunal to decide under kompetenz-kompetenz and Article 21 of the UNCITRAL Rules. The Court referred to Phoenix Action v. Czech Republic on this point. ¶¶ 46, 49–52
  5. All of India's grounds can be raised before and decided by the tribunal: genuineness of the investor, no expropriation, the UASL/Indian law regime, waiver through the TDSAT proceedings, and overlapping claims. The proceedings are not oppressive, vexatious or an abuse of process at this stage, so the request for ad-interim relief staying the arbitration was rejected. These findings are expressly prima facie. ¶¶ 53–55

Procedural history

  1. 16 April 2012Capital Global Limited and Kaif Investment issue a notice seeking settlement under Article 8.1 of the BIT.
  2. 30 September 2013Khaitan Holdings issues its notice of arbitration under Article 8.2 of the BIT. Both sides nominate arbitrators in 2013.
  3. 29 May 2018The PCA, as appointing authority, appoints the presiding arbitrator.
  4. 24 January 2019India tells the tribunal it will seek an anti-arbitration injunction in India. Khaitan Holdings asks the tribunal for a pro tem injunction to stop India doing so.
  5. 25 January 2019India files suit CS (OS) 46/2019 in the Delhi High Court. The Court issues notice returnable on 28 January 2019.
  6. 28 January 2019The Court hears the parties, sets out the issues, and directs Khaitan Holdings to seek postponement of the tribunal's hearing of its interim-relief application.
  7. 29 January 2019The Court rejects India's request for ad-interim relief staying the arbitration and lists the suit for 5 March 2019.

Tribunal, counsel and experts

Decided by
For the claimant
Dayan Krishnan · Misha Rohatgi Mohta
For the respondent
Sanjay Jain · Piyush Joshi · Anuradha R. V. · Sumiti Yadava · Lalia Philip · Prithvirat Chauhan · Saniya Scott · Yuvraj Singh

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
PCA Case No 2018-50
Country
Claimant
Khaitan Holdings Mauritius Limited
Respondent
India
Treaty
India - Mauritius BIT (1998)