Indian Government launches international research project on the impact of Bilateral Investment Treaties on investment flows from/to the country

India entered into its first bilateral investment treaty (BIT), with the United Kingdom, in 1994, as part of a strategy to attract inbound foreign direct investment (FDI).  Having begun to open its economy in the 1990s, India today is a major investment destination.  The Modi government has been keen to attract further investment, including with its “Make in India” campaign.

However, in recent years, a variety of events has led to India being the recipient of a large number of claims by investors under BITs. By 2016, India was one of the most frequently-named respondent states in BIT proceedings.  Following its first loss in a BIT arbitration in 2011 (the White Industries case, discussed here.  Note: India has recently won its first BIT case, discussed here), the stance of the Indian government towards BIT protections for inbound investors appeared to harden, leading it to send notices in 2016 to terminate BITs with 58 countries, including 22 EU countries (discussed here).  This followed its publication of a new 2015 Model BIT (discussed here).  For the remaining BITs not cancelled in 2016/2017 (seemingly because they were within their initial terms), India has circulated a proposed joint interpretative statement to the counterparties to these BITs seeking to align the ongoing treaties with its 2015 Model BIT.

There are no known instances of states agreeing to a new treaty based on India’s 2015 Model BIT, although it was reported last year that the Indian government had approved a joint interpretative note to apply to India’s BIT with Bangladesh

In the meantime, the Indian government, through the Centre for Trade and Investment Law (CTIL), a think-tank established in 2016 by the Ministry of Commerce and Industry, in collaboration with Dr. Rishab Gupta, Partner, of Shardul Amarchand Mangaldas & Co., has instituted a survey on experiences and attitudes towards BIT protections, and their importance to FDI flows into and out of India.  This outbound element is an important aspect of the analysis as Indian businesses are increasingly involved in FDI outside India, and may wish to take advantage of BIT protections over their investments.

A link to the survey can be found below, which we understand will remain active until the end of October 2018. The survey contains 10-12 questions which vary depending on the initial answers regarding the location and type of entity responding.

http://survey.sogosurvey.com/r/r1ocQs

The outcome of the questionnaire together with the rest of the study results are scheduled to be publicly released by the end of 2018. All stakeholders with experience of or insight into the BIT regime applicable to India are encouraged to participate.

For further information, please contact Nicholas Peacock, Head of the India Disputes Practice, or your usual Herbert Smith Freehills contact.

Nicholas Peacock
Nicholas Peacock
Partner
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+44 20 7466 2803

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Filed under Asia, India, Investment Arbitration, ISDS, Public international law, Trade Agreements

Be on time to preserve your right to Active Remedies – the Singapore High Court considers a party’s duty to apply promptly when challenging the jurisdiction of an arbitral tribunal

In Rakna Arakshaka Lanka Ltd (“RALL“) v Avant Garde Maritime Services (Private) Limited (“AGMS“) [2018] SGHC 78, the Singapore High Court dismissed an application to set aside an award on jurisdiction, on the basis that the applicant had failed to challenge the tribunal’s preliminary ruling on jurisdiction within the deadline stipulated under section 10(3) of the International Arbitration Act (“IAA“) and Article 16(3) of the UNCITRAL Model Law. The decision provides guidance on the distinction between active and passive remedies in the context of applicable deadlines when seeking to set aside an award on grounds of jurisdiction, and resisting enforcement on the same basis. Continue reading

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Recent developments in the Hong Kong Competition Regime

In this update, we discuss two recent developments in the Hong Kong competition regime: first, the third cartel case prosecuted by the Hong Kong Competition Commission (Commission) since the coming into force of the Competition Ordinance (Ordinance) in December 2015; and second the transfer of two contractual claims from the High Court to the Hong Kong Competition Tribunal (Tribunal), which raises the possibility of private enforcement actions.

Third case prosecuted by the Commission

On 6 September 2018, the Commission started prosecuting its third case in the Tribunal, alleging infringement of the First Conduct Rule (which prohibits anticompetitive agreements between competitors). The Commission is alleging that three construction companies and two individuals allocated customers and coordinated pricing, from June to November 2017, in relation to the provision of interior renovation services at the King Tai Court housing estate, in Kowloon. The case reportedly arose from a complaint by a member of the public to the Commission, following the widespread reporting of the Commission’s second case which alleges similar practices by different companies at a different housing estate.

Importantly, this is the first time the Commission has brought direct enforcement action against individuals. Under the Ordinance, the Commission can apply for director disqualification orders (DDOs) for up to 5 years. In explaining its decision to apply for DDOs, the Commission commented that “to deter a company from engaging in cartel conduct, it is also necessary to deter the individuals through which the company acts”. It remains to be seen whether the Commission will more readily pursue directors and senior management in the future. The third case brought by the Commission also highlights its continued focus on cartel conduct.

Private actions

The Ordinance does not set out a right for private claimants to bring stand-alone antitrust actions. Currently, only so-called follow-on actions can be brought by private parties. This means that private enforcement action can only be taken where there has been a prior determination of a contravention of a conduct rule set out in the Ordinance (such as in an action brought by the Commission in the Tribunal).

However, the recent transfer of two related cases from the High Court to the Tribunal has raised the question of whether the Competition Ordinance may be used in private actions in Hong Kong. The cases involve contractual claims by Taching Petroleum and Shell, which both allege that Meyer Aluminium failed to pay for a supply of industrial diesel. Meyer’s defence in both actions is that Taching Petroleum and Shell have engaged in price fixing in breach of the First Conduct Rule under the Ordinance. The competition law defence aspects of the two cases were transferred by the High Court to the Tribunal in July and September 2018 respectively. On 12 September 2018, it was decided by the Tribunal that the cases should be listed and heard together for directions until further order.

Note that the transfer of these cases merely gives Meyer the right to defend itself by raising competition law grounds: it does not set out a right to found a cause of action. According to public sources, the CEO of the Commission said in September 2018 that the lack of standalone actions for damages in the current regime may mean the Commission has to bring more cases to the Tribunal in order to ensure that victims have a means of recovery.

If you have any questions regarding this update, please contact one of the following members of the Herbert Smith Freehills competition team for more information:

Mark Jephcott
Mark Jephcott
Head of competition - Asia, Hong Kong
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+852 2101 4027
Adelaide Luke
Adelaide Luke
Senior associate, Hong Kong
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+852 2101 4135
Ajit Kainth
Ajit Kainth
Registered foreign lawyer (England& Wales), Hong Kong
Email
+852 2101 4263
Howard Chan
Howard Chan
Associate, Hong Kong
Email
+852 2101 4265

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Filed under Competition law, Hong Kong

Recent Developments in India-related International Arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin.

In this issue we consider various court decisions, which cover issues such as the applicability of the Arbitration Amendment Act 2015, binding non-signatories to an award, enforcement of an award before the National Company Law Tribunal, and the continued pro-arbitration approach of the Indian courts. In other news, we consider the continued rise of institutional arbitration in India, a detailed analysis of the proposed amendments to the Arbitration Act, as well as India-related bilateral investment treaty news (and other developments). Continue reading

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Filed under Arbitration, Global Pound Conference

Recent Developments in India-related International Arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin.

In this issue we consider various court decisions, which cover issues such as the applicability of the Arbitration Amendment Act 2015, binding non-signatories to an award, enforcement of an award before the National Company Law Tribunal, and the continued pro-arbitration approach of the Indian courts. In other news, we consider the continued rise of institutional arbitration in India, a detailed analysis of the proposed amendments to the Arbitration Act, as well as India-related bilateral investment treaty news (and other developments).

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Filed under Arbitrability, Arbitration laws, Arbitration proceedings, Asia, Global Pound Conference, India, Institutions, Investment Arbitration, ISDS, News

Herbert Smith Freehills edits and contributes chapters to Getting the Deal Through – Financial Services Litigation 2018

There has been a significant rate of global growth of litigation in the financial services sector following the 2008 global financial crisis. While the existence of financial services litigation is truly a global phenomenon, it has become apparent that the law and procedures in relation to such disputes have evolved in different ways across the jurisdictions.

The recently published third edition of Getting the Deal Through – Financial Service Litigation, edited by Damien Byrne Hill and Ceri Morgan, compiles chapters dedicated to financial services litigation from jurisdictions across the globe, including those contributed by a number of our offices.

The text charts the growth of litigation in the financial sector worldwide, with expert authors answering key questions in major jurisdictions. Topics include: common causes of action; powers of regulatory authorities; alternative dispute resolution; specialist courts and procedures; disclosure requirements; data governance issues; remedies and enforcement; and changes in the regulatory landscape since the financial crisis.

Please find attached a copy of the publication, also available on the Getting the Deal Through website.

Contributing offices

AustraliaAndrew Eastwood, Tania Gray and Simone Fletcher

FranceClément Dupoirier and Antoine Juaristi

GermanyMatthias Wittinghofer and Tilmann Hertel

Hong KongGareth Thomas, William Hallatt, Hannah Cassidy, Dominic GeiserJojo Fan and Valerie Tao

IndonesiaAlastair Henderson and Emmanuel Chua

South AfricaPeter Leon and Jonathan Ripley-Evans

United Arab EmiratesStuart Paterson, Natasha Mir and Sanam Khan

United KingdomDamien Byrne Hill, Karen Anderson, Ceri Morgan, Ajay Malhotra, Sarah Thomas and Ian Thomas

United StatesScott Balber, Jonathan Cross and Michael R Kelly

Accreditation: Reproduced with permission from Law Business Research Ltd. Getting the Deal Through – Financial Services Litigation 2018 was first published in August 2018. For further information please visit www.gettingthedealthrough.com.

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Filed under Announcements, Financial Services Regulation, Hong Kong

India’s lower house of Parliament approves further amendments to the Indian Arbitration Act

As previously reported here, a draft Bill to amend the Arbitration and Conciliation Act 1996 (the “Act“) was approved by the Indian Cabinet on 7 March 2018 (the “Bill“). The Bill was listed as a part of the agenda for the monsoon session of the Indian Parliament and was passed by the Lower House on 10 August 2018, without any amendments. The text of the Bill can be found here.

The Law Minister has described the Bill as “a momentous and important legislation” aimed at making India “a hub of domestic and international arbitration”. The key features of the Bill are:

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Filed under Arbitration laws, Arbitrators, Asia, Confidentiality, India

HONG KONG: COURT OF FINAL APPEAL REJECTS POLICY ON DEPENDANT SPOUSAL VISAS FOR SAME-SEX COUPLES

A landmark decision of the Hong Kong Court of Final Appeal (CFA) has upheld the decision of the Court of Appeal (discussed here) that the Hong Kong Director of Immigration’s policy of refusing to grant dependant visas to same sex spouses is discriminatory and not justified (QT v Director of Immigration [2018] HKCFA 28). Continue reading

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Filed under Constitution, Employment, Evidence, Government proposals and consultations, Hong Kong, Judicial review, Jurisdiction, Remedies

HONG KONG HIGH COURT PROVIDES GUIDANCE ON THE ENFORCEMENT OF MAINLAND JUDGMENTS IN HONG KONG

The Hong Kong Court of First Instance (“CFI“) recently handed down judgment in Export-Import Bank of China v Taifeng Textile Group Co. Ltd and Another [2018] HKCFI 1840, which concerns the enforcement of a Mainland judgment in Hong Kong. The CFI provided guidance on various aspects of the enforcement exercise which serves as useful practice reminders for practitioners. Continue reading

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Filed under China, Enforcement, Hong Kong, Interim applications

Latest bank victory – Hong Kong High Court dismisses mis-selling claim

The Hong Kong Court of First Instance has recently handed down its judgment in Shine Grace Investment Ltd v. Citibank, N.A. and Another (HCCL 28/2008), a case relating to alleged mis-selling of equity accumulator contracts by Citibank.

In dismissing the plaintiff’s claim, Mr Justice Peter Ng applied the Hong Kong Court of Appeal’s (CA’s) reasoning in Chang Pui Yin & Ors v Bank of Singapore [2017] 4 HKLRD 458 that a bank-customer relationship alone does not without more give rise to a duty to advise on the part of the bank. Instead, whether the bank has assumed any such duty or legal responsibility will be assessed objectively, for instance through the contractual terms and any other relevant factual circumstances concerning the bank and its customers.

This is another welcome decision for banks, affirming the central importance of the contractual terms themselves. As a matter of contractual interpretation, the court rejected an argument that the SFC’s main code of conduct had been incorporated by the express terms of the relevant contractual documents. Apart from the contractual terms, the relative sophistication and character of the customer in question was also highly relevant to the court’s decision.

Going forward, financial institutions will no longer be able to rely on their contractual terms to exclude or limit liability in relation to investments entered into after 9 June 2017. Since that date, where a written client agreement is required under SFC regulations (ie, primarily where individual investors and inexperienced corporate investors are involved), a financial institution subject to the regulations is required to include a mandatory suitability clause in the agreement, and may not derogate from this requirement by way of any other contractual arrangement. In the longer term, this is likely to mean fewer mis-selling cases along the lines of Shine Grace. Continue reading

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Filed under Contract, Financial Services Regulation, Hong Kong