WHITE INDUSTRIES V.

INDIA

On November 30th, 2011 the first publicly known arbitral award was awarded against
India.1 In White Industries v. India, an ISDS tribunal found that India had breached its
obligations under the India-Australia BIT. The award emboldened foreign investors
operating in India and opened a floodgate of ISDS notices being issued against India
for a wide range of alleged BIT violations.2

The essentials of the case were that White Industries Ltd., was developing a coal mine
in India and had entered into a commercial contract with an Indian public sector
company, Coal India, for the supply of equipment etc. The contract was governed by
Indian law and in case of any disputes an arbitration clause specifically referred to the
International Chamber of Commerce (ICC) Arbitration Rules. 3 Disputes between the
two parties eventually arose and an arbitration court in London ruled in favour of
White Industries on 27th of May 2002. Discontent with the ruling, Coal India
subsequently applied to the High Court of Calcutta to have the ICC award set aside.
Unaware of this, White Industries applied to the High Court of Delhi to have the ICC
award enforced. This set-in motion a time-consuming and complicated process
regarding jurisdiction, the enforcement of foreign awards and choice of law which
lasted for more than seven years. Fed up with the delay in the Indian courts, White
Industries eventually issued an ISDS claim against India under the India-Australia
BIT on December 10th, 2009.4White Industries argued that the delay in Indian courts
had violated the India-Australia BIT provisions on fair and equitable treatment (FET),
expropriation, most favoured nation (MFN) and the free transfer of funds. The ISDS-
tribunal dismissed all claims except the claim of India having violated the MFN
provision and ruled that the delay by Indian courts had been a breach of India’s
obligation to provide White Industries with an “effective means of asserting claims
and enforcing rights”. However, the India-Australia BIT did not contain such an
obligation, but the tribunal stated in its award that White Industries could, given the

1
White Industries Australia Limited v. Republic of India, UNCITRAL, Final Award (Nov. 30, 2011).
2
Ranjan, The 2016 Model Indian Bilateral Investment Treaty: A Critical Deconstruction, p. 13.
3
4 Kachwaha, The White Industries Australia Limited – India BIT Award: A Critical Assessment, p. 276.
4
Ibid., p. 279.
MFN provision, borrow the “effective means” provision found in the India-Kuwait
BIT, and consequently found that India had violated the India-Australia BIT.5

The White Industries award is a clear example of an international adjudicating

mechanism assuming mandate to decide on what constitutes effective investment
protection, a prerogative historically bestowed upon sovereign States and administered
by the principled obligation to act in good faith, see e.g. the Neer decision. In the
aftermath of the White Industries award foreign investors in India picked up the scent
of blood. From 2012 and onwards no less than 22 ISDS cases has been submitted
against India, challenging numerous regulatory measures like the imposition of
retrospective taxes, cancellation of spectrum licenses and revocation of telecom
licenses.6

The number of BITs has steadily increased across the world, from 500 in the 1990s to
more than 3,324 by the end of 2016.7 This increasing mass of BITs has led to a
significant increase in investor-state disputes in international investment law where a
wide array of sovereign regulatory measures, such as environmental policy,8
regulatory issues related to supply of drinking water,9 monetary policy, laws and
policies related to taxation,10 and regulations related to health11 have been challenged
by foreign investors as potential breaches of BITs. Foreign investors challenging
sovereign regulatory measures of host states under BITs should not come as a surprise
because that is what BITs are meant to do—to hold states accountable for the exercise
of public power while dealing with foreign investment. However, adjudication of such
a wide gamut of sovereign regulatory measures by ISDS tribunals as potential
breaches of BITs, involving award of substantive damages to foreign investors, thus
5
6 Ranjan, The White Industries Arbitration: Implications for India’s Investment Treaty Program.
6
Ranjan, Singh, James & Singh, India’s Model Bilateral Investment Treaty: Is India too risk averse? p. 9.
7
This includes 2957 stand-alone investment treaties and 367 Treaties with Investment Provisions (TIPs) or investment
chapters in FTAs. See UNCTAD, WORLD INVESTMENT REPORT – INVESTOR NATIONALITY: POLICY
CHALLENGES 101 (2017) [hereinafter, UNCTAD, WORLD INVESTMENT REPORT 2017].
8
Metalclad Corporation v. United Mexican States, ICSID Case No. ARB(AF)/97/1, Award (Aug. 30, 2000); Methanex
Corporation v. United States of America, NAFTAUNCITRAL, Award, (Aug. 3, 2005).
9
Biwater Gauff Ltd v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, (Jul. 24, 2008).
10
Occidental Exploration & Production Co. v. Republic of Ecuador, LCIA Case No. UN3467, Final Award, (Jul. 1, 2004);
EnCana Corporation v. Republic of Ecuador, LCIA Case No. UN3481, Award, (Feb.3, 2006); Marvin Roy Feldman Karpa
v. United Mexican States, ICSID Case No. ARB(AF)/99/1, Award (Dec. 16, 2002) [hereinafter Feldman]; Burlington
Resources, Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on Liability, (Dec. 14, 2014)
11
Philip Morris Asia Ltd. v. The Commonwealth of Australia, UNCITRAL, PCA Case No. 2012-12, Award on Jurisdiction
and Admissibility, (Dec. 17, 2015); Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. v.
Oriental Republic of Uruguay, ICSID Case No. ARB/10/7 (Jul. 8, 2016).
resulting in the diversion of taxpayer’s money to foreign investors, have generated a
backlash against international investment law, which has been well documented. This
backlash has been further fuelled by instances where a similar set of facts, 12 or the
same provision of a BIT,13 has been interpreted differently by tribunals.

12
The most commonly stated example of this is the Lauders case where two arbitration tribunals gave different decisions to
essentially the same set of facts for disputes brought under two different BITs. The cases are: CME Czech Republic BV v.
The Czech Republic, UNCITRAL, Final Award (Mar. 14, 2003) and Lauder v. The Czech Republic, UNCITRAL, Final
Award (Sept. 3, 2001).
13
The Argentine cases on Article XI of the Treaty between United States of America and the Argentine Republic
Concerning the Reciprocal Encouragement and Protection of Investment (signed Nov. 14, 1991, entered into force Oct. 20,
1994) [hereinafter US Argentina BIT], are a good example of such inconsistency