Louis Dreyfus Armateurs SAS v. Republic of India

Case summary

At a glance

Parties: Louis Dreyfus Armateurs SAS (France) v. the Republic of India
Case no.: PCA Case No. 2014-26
Forum and rules: Ad hoc arbitration under the UNCITRAL Arbitration Rules 1976, administered by the PCA; place of arbitration London
Treaty: France–India BIT of 2 September 1997
Tribunal: Jean E. Kalicki (Presiding Arbitrator), Julian D.M. Lew, J. Christopher Thomas
Sector: Ports; mechanised dry bulk cargo handling
Outcome: All claims dismissed (Award of 11 September 2018). Under Article 2(1) of the BIT, LDA's indirect investment in HBT was not protected, and LDA did not show wrongful conduct directed at its protected investment in ALBA. India's conditional counterclaims were treated as withdrawn.
Amount: Claimed: USD 36,155,825 plus interest, and USD 4.5 million for moral and reputational harm. Awarded: nothing. LDA bears 90% of the Tribunal and PCA costs (total USD 1,352,213.25) and must pay India USD 540,885.30 for them, plus USD 6,626,971.85 (70%) of India's claimed legal and expert costs of USD 9,467,102.65.

The dispute

Louis Dreyfus Armateurs SAS (LDA), a French shipping company, held 49% of ALBA Asia Private Limited, an Indian joint venture with ABG Ports Limited. ALBA held 63% of Haldia Bulk Terminals Private Limited (HBT) and was entitled to 98.78% of its profits. On 16 October 2009 HBT signed a contract with the Kolkata Port Trust (KoPT) to mechanise cargo handling at Berths 2 and 8 of the Haldia Dock Complex. The project faced delays, labour unrest, disputes over how much cargo was allocated to the berths, and violence, including an alleged abduction of HBT staff at gunpoint. HBT terminated the contract on 31 October 2012. LDA claimed that Indian authorities, acting for local "Vested Interests" (the stevedoring company Ripley and union leaders linked to the TMC party), obstructed and then drove out the project. It alleged expropriation, breach of fair and equitable treatment, breach of full and complete protection and safety, and discrimination. India raised eleven jurisdictional objections, including failure to observe a cooling-off period and the 51% ownership threshold in Article 2(1). It also argued that KoPT's conduct was not attributable to the State, that the project failed because of LDA's own business decisions, and it brought conditional counterclaims.

Key holdings

Article 9 of the BIT imposes no waiting period before investor-State arbitration: Article 9(3) allows arbitration "at any time" and "notwithstanding" the six-month period for conciliation in Article 9(2). India's first objection was dismissed. The Tribunal added that if a waiting period had existed, it would have been jurisdictional and could not be satisfied by time running after the Notice of Arbitration. Decision on Jurisdiction ¶¶ 83–85, 94–95, 100
Article 2(1) limits protection of indirect investments to those made through an intermediate company owned at least 51% by the investor, "wherever located", including in India. LDA therefore cannot claim for its indirect investment in HBT, which it holds through ALBA, where it owns 49%. The MFN clause cannot be used to widen the Treaty's scope. LDA may still bring an analytically distinct claim for wrongdoing that injured its direct investment in ALBA. Decision on Jurisdiction ¶¶ 138–151, 157
The Tribunal has jurisdiction only over State conduct taken directly towards ALBA, or taken towards HBT with the intention of harming ALBA or LDA. Knowing who owns HBT upstream, or causing economic ripple effects on ALBA, is not enough. Award ¶¶ 317–319, 332–333
LDA did not prove its "intentional targeting" theory against KoPT, the Ministry of Shipping, the Customs Authority or the police. KoPT, for example, defended the contract against Ripley's challenge and resisted HBT's suspension of operations. The fair and equitable treatment, full protection and security, and discrimination claims concerned only treatment of HBT and fall outside jurisdiction. The Tribunal did not decide whether KoPT's conduct was attributable to India. Award ¶¶ 346–367, 380–385, 392
The few claims about conduct towards ALBA itself fail on the merits. KoPT's suggestion that the blacklisting be extended to HBT's group companies was rejected by the Ministry of Shipping, and the alleged disputes over other projects involved ABG companies in which neither LDA nor ALBA held shares. Award ¶¶ 368–371
No expropriation. Article 6(1) requires dispossession of the protected investment as a whole. ALBA remains a going concern. LDA cannot carve out the part of ALBA's value attributable to HBT and treat it as a separate investment, because that would get around the Article 2(1) exclusion. Award ¶¶ 413–421
Costs broadly follow the event but are reduced: India caused the extra hearing day, and its costs were more than two and a half times LDA's. LDA bears 90% of the Tribunal and PCA costs and 70% of India's party costs. Interest on costs was refused. Award ¶¶ 439–446, 454

Procedural history

11 November 2013LDA serves its Notification of Claim under Article 9 of the BIT.
31 March 2014LDA files its Notice of Arbitration.
8 September 2014The co-arbitrators appoint Jean E. Kalicki as Presiding Arbitrator.
29 September 2014The Calcutta High Court, on KoPT's application for an anti-arbitration injunction, restrains LDA from pursuing the BIT arbitration against KoPT but allows the claims against India to proceed.
13 August 2015Procedural Order No. 2 bifurcates India's first and second objections.
22 December 2015Decision on Jurisdiction: the cooling-off objection is dismissed; the claim for the indirect investment in HBT is excluded; a claim for the direct investment in ALBA may proceed.
11 May 2016Procedural Order No. 5 denies India's second request for bifurcation and joins its objections to the merits.
20 July 2016LDA files its Further Amended Statement of Claim, pleading that ALBA and LDA were intentionally targeted.
27 November 2017 – 29 January 2018Merits hearing in London, reconvened on 29 January 2018 after India's Additional Document Verification.
11 September 2018Award: all claims dismissed; India's counterclaims treated as withdrawn; LDA ordered to pay costs.