Do treaties make states responsible to investors?

Of the plethora of treaty-based claims initiated against India in the mid-2000s, White Industries’ arbitration claim is the only known treaty-based arbitration claim pending to date. A commercial affair between two companies has been elevated as an international claim and has enmeshed the government of India.

The dispute dates back to 1989, when White Industries and its Indian joint-venture partner, the state-owned Coal India, entered into a contract for the supply of equipment and development of coal mines at Piparwar (now Jharkhand). The 1989 agreement was governed by the International Chamber of Commerce (ICC) Arbitration Rules and the contract purportedly excluded the operation of the Indian Arbitration Act, 1940.

Disputes arose in relation to certain entitlements to bonuses that were granted to White Industries under the agreement. White Industries referred the disputes to arbitration. In 2002, the arbitral tribunal awarded A$4.1million (US$4.2 million), plus interest and expenses, to White Industries.

Vivek Vashi is a partner in the litigation department at Bharucha & Partners where Nitisha Bishnoi is an associate