Court of Appeal upholds finding of Arbitral jurisdiction in UAE – India Bilateral Investment Treaty

The Court of Appeal held that the key jurisdictional provision in the UAE / India treaty – relating to “executive action applied directly to an Investment” - was satisfied in respect of an investment in the form of a shareholding in a company when damage was caused to the value of the shares in that company, even if the rights over the shares themselves were unaffected.

That was because the executive action was necessarily applied to the shares “as an investment” and that was what mattered, rather than action applied directly to the shares simpliciter. The Court of Appeal held that any other conclusion would largely emasculate the substantive investment protections in the treaty.

The Court held that the damage had occurred because the RAKIA investment was in a company formed to establish an alumina and aluminium industry in Andhra Pradesh exploiting local deposits of bauxite, and the executive action complained of had ended the availability of that bauxite and led to the termination of the contract by which it was to be supplied.

In reaching these conclusions the Court of Appeal upheld the earlier judgment of Mr Justice Robin Knowles OBE and differed from the Tribunal (comprising Lord Hoffmann, Justice Chandramauli and William Rowley KC).

Tim Otty KC (leading Ben Juratowich KC and Benedict Tompkins) and instructed by Freshfields LLP acted for RAKIA.

A copy of the Court of Appeal’s judgment is here.