LDA v. India, Award, 11 Sept 2018

ABG Consortium	Consortium Consisting of ABG Infralogistics and its subsidiary ABG Kolkata Container Terminals Private Limited
ABG Infra	ABG Infralogistics
ABG Kolkata	ABG Kolkata Container Terminals Private Limited
ABG Ports	ABG Ports Limited
Additional DocumentVerification	Document verification conducted by the Respondent after the Hearing regarding events that took place at HDC between the Notice of Suspension and the Notice of Termination
Agreed Chronology ofEvents	The Parties' Agreed Chronology of Events, dated 8 November 2017
ALBA	ALBA Asia Private Limited, formerly ABG-LDA Bulk Handling Private Limited
Amended Statement ofClaim	LDA's Amended Statement of Claim, dated 17 February 2016
Berths	Berths Nos. 2 and 8 at the Haldia Dock Complex
Bifurcation Request	Request for Bifurcation, dated 7 July 2015
Bifurcation Response	LDA's Response to Request for Bifurcation, dated 28 July 2015
Blacklisting Order	KoPT order banning business dealing with HBT for five years, dated 16 June 2014
CISF	Central Industrial Security Force
CITU	Centre of Indian Trade Unions
Claimant	Louis Dreyfus Armateurs SAS (also referred to as LDA)
CPI	Communist Party of India (Marxist)
Consent Order	Consent Order issued by the Calcutta High Court, dated 12 September 2012
Contract	Agreement between the Board of Trustees for the Port of Kolkata and ABG Haldia Bulk Terminals Private Limited in Respect of Supply, Operation and Maintenance of Different Cargo Handling Equipment at Berths No. 2 and 8 of Haldia Dock Complex, Kolkata Port Trust, dated 16 October 2009
Contracting Parties	Contracting Parties to the France-India BIT
Counter-Memorial	India's Counter-Memorial on Merits and Remaining Jurisdictional/Admissibility Issues Memorial on Counterclaims, dated 3 November 2016
Counter-Memorial onJurisdiction	India's Statement of Defense, Counter-Memorial on Jurisdiction and Admissibility, dated 7 July 2015
Customs Authority	Office of the Commissioner of Customs
Decision on Jurisdiction	The Tribunal's Decision on Jurisdiction, dated 22 December 2015
EPCG	Export Promotion Capital Goods
FIPB	Foreign Investment Promotion Board of India
FIR	First Information Report (a form of incident report to the police)
First Objection	India's first Objection as described and numbered in its Bifurcation Request (that the Tribunal lacks jurisdiction Ratione Voluntatis because LDA failed to comply with jurisdictional preconditions to arbitration)
Five Star	Five Star Shipping Agency
France-India BIT	Agreement between the Government of the Republic of India and the Government of the Republic of France on the Reciprocal Promotion and Protection of Investments, dated 2 September 1997 (also referred to as the Treaty)
Further AmendedStatement of Claim	LDA's Further Amended Statement of Claim, dated 20 July 2016
HBT	Haldia Bulk Terminals Private Limited, formerly ABG Haldia Bulk Terminals Private Limited
HDBC	Haldia Dock Bachao Committee
HDC	Haldia Dock Complex
Hearing	The hearing held between 27 November and 1 December 2017, resuming for two additional days on 3 December and 4 December 2017 (later reconvened on 29 January 2018 following the Additional Document Verification)
India	The Republic of India (also referred to as Respondent)
ILC Articles	International Law Commission's Draft Articles on Responsibility of States for Wrongful Acts
India's Cost Submission	India's Submission on Costs, dated 18 May 2018
India's Post-Hearing Brief	India's Post-Hearing Brief, dated 3 April 2018
INTTUC	Indian Trinamool Trade Union Congress
KoPT	Board of Trustees for the Port of Kolkata (also referred to as the Kolkata Port Trust)
LDA	Louis Dreyfus Armateurs SAS (also referred to as Claimant)
LDA's Cost Submission	LDA's Submission on Costs, dated 10 May 2018
LDA's Post-Hearing Brief	LDA's Post Hearing Brief, dated 30 March 2018, as corrected on 6 April 2018
LoI	Letter of Intent dated 29 April 2009 signed by the ABG Consortium and KoPT
MLP	Minimum Level of Performance, as defined by the Tender and the Contract
MMT	Million metric tons
MoS	Ministry of Shipping
MT	Metric tons
Notice of Arbitration	LDA's Notice of Arbitration, dated 31 March 2014
Notice of Suspension	Notice of Suspension of Operations, dated 23 August 2012
Notice of Termination	Notice of Termination, dated 31 October 2012
Notification of Claim	Notification of Claim, dated 11 November 2013
Objections	India's Objections to Jurisdiction, Nos. 1-11, set out in India's Bifurcation Request
Parties	Claimant and Respondent
PCA	Permanent Court of Arbitration
PO1	Procedural Order No. 1, dated 13 April 2015
PO2	Procedural Order No. 2, dated 13 August 2015
PO3	Procedural Order No. 3, dated 11 September 2015
PO4	Procedural Order No. 4, dated 23 February 2016
PO5	Procedural Order No. 5, dated 11 May 2016
PO6	Procedural Order No. 6, dated 22 June 2016
PO7	Procedural Order No. 7, dated 9 January 2017
PO8	Procedural Order No. 8, dated 6 September 2017
PO9	Procedural Order No. 9, dated 4 November 2017
PO11	Procedural Order No. 11, dated 11 January 2018
Port	Port of Kolkata (Calcutta), India
Project	The operations anticipated pursuant to the Contract
Rejoinder	India's Rejoinder on The Merits and Remaining Jurisdictional/Admissibility Issues and Reply on Counterclaim, dated 8 August 2017
Reply	LDA's Reply to India's Counter-Memorial, dated 17 April 2017
Ripley	Ripley & Co. Ltd. and its affiliated entities
Second BifurcationRequest	India's Request for Bifurcation of Further Objections to Jurisdiction and Admissibility, dated 28 March 2016
Second BifurcationResponse	LDA's Response to Respondent's Request for Request for Bifurcation of Further Objections to Jurisdiction and Admissibility, dated 11 April 2016
Second Counter-Memorial on Jurisdiction	India's Counter-Memorial on Further Objections to Jurisdiction, dated 28 March 2016
Second Objection	India's second Objection as described and numbered in its Bifurcation Request (that the Tribunal lacks jurisdiction because the Investments were made through a company of which LDA owns less than 51 percent)
Statement of Claim	LDA's Statement of Claim, dated 3 March 2015
Statement of Defense	India's Statement of Defense, dated 7 July 2015
TMC	All India Trinamool Congress Party
Tender	Tender for Supply, Operation and Maintenance of Different Cargo Handling Equipment at Berth # 2 & 8 of Haldia Dock Complex, Kolkata Port Trust, No. Ad/Equipping/2007-08
Treaty	Agreement between the Government of the Republic of India and the Government of the Republic of France on the Reciprocal Promotion and Protection of Investments, dated 2 September 1997 (also referred to as France-India BIT)
UNCITRAL Rules	Arbitration Rules of the United Nations Commission on International Trade Law 1976
VCLT	Vienna Convention on the Law of Treaties, dated 23 May 1969
Vested Interests	As defined by LDA, to include inter alia Ripley and various leaders of INTTUC and the TMC

1.

This is a proceeding alleging violations of the Agreement between the Government of the Republic of India and the Government of the Republic of France on the Reciprocal Promotion and Protection of Investments dated 2 September 1997 (the "Treaty" or "France-India BIT"). Claimant, Louis Dreyfus Armateurs SAS ("LDA" or "Claimant"), alleges numerous violations of the Treaty. Respondent, the Government of the Republic of India ("India" or "Respondent," and together with LDA, the "Parties"), disputes both LDA’s jurisdiction to pursue these particular claims, and also LDA’s allegations on the merits; it also pleads certain conditional counterclaims.

2.

As discussed herein, the Parties agree that the project at the heart of their dispute, a plan for the mechanization of cargo handling operations at two berths of the Haldia Dock Complex ("HDC") at the Port of Kolkata ("Port"), was unprecedented in India. Prior to this project, cargo at these berths (like that at many other ports in India) had been unloaded from ships through stevedoring operations involving large contingents of manual laborers. The modernization plan from which this dispute arises envisioned the integration into Berths No. 2 and 8 (the "Berths") of large mobile harbor cranes, together with other modern equipment and cargo handling practices, to significantly increase both the efficiency of operations and the overall volume of cargo that effectively could be handled.

3.

The Parties also agree that this project ultimately failed. The core of their dispute on the merits is why it failed, and whether any acts attributable to India that allegedly contributed to its failure fell below the thresholds of State conduct required under the Treaty.

4.

As a threshold issue, however, the Parties also dispute whether this Tribunal may examine LDA’s claims on the merits. India raises numerous jurisdictional objections, one of which was the subject of the Tribunal’s Decision on Jurisdiction dated 22 December 2015 (the "Decision on Jurisdiction"), involving an unusual Treaty provision that distinguishes between investments that are protected under its rubric and others that are not. As discussed hereafter, the Tribunal determined earlier in these proceedings that this core jurisdictional issue could not be resolved in the abstract, because as ultimately pleaded by LDA, it was intertwined with factual issues regarding the actions allegedly attributable to India and the particular entities and investments to which those actions were allegedly directed. The Tribunal accordingly provided LDA a full opportunity to try to substantiate, on the merits, its allegation that the challenged State conduct had been taken with respect to an investment that was protected under the Treaty, and not simply with respect to an investment that was excluded from Treaty protection. Ultimately, however, the Tribunal determines that LDA has failed to meet its burden of demonstrating a Treaty violation by India with respect to an investment that is protected under the France-India BIT.

5.

LDA is a company duly incorporated and existing under the laws of France. Its principal place of business is at Immeuble "Les écluses," 28, Quai Gallieni, 92158 Suresnes Codex, France and it is registered under No. 652-012-311 in the Companies and Trade Registry of Nanterre, France. LDA is represented in these proceedings by: Dr. Tariq Baloch, whose address is 3 Verulam Buildings, Gray's Inn, London, WC1R 5NT, United Kingdom; Mr. Farhad Sorabjee, Mr. Varghese Thomas, Ms. Arti Raghavan, Ms. Shanaya Irani, and Ms. Neeraja Balakrishnan of J. Sagar Associates, Vakil's House, 18 Sprott Road, Ballard Estate, Mumbai 400 001, India; until 24 December 2015 only, Professor Vaughan Lowe QC of Essex Court Chambers, 24 Lincoln's Inn Fields, London WC2A 3EG, United Kingdom; and from 17 October 2016, Dr. Georgios Petrochilos of Three Crowns LLP, 104 avenue des Champs-Elysées 75008, Paris, France.

6.

India is a sovereign state. It is represented by Mr. Mark A. Clodfelter, Dr. Constantinos Salonidis, Ms. Oonagh Sands, Mr. Ofilio J. Mayorga, Mr. Joseph Klingler, and Ms. Diana Tsutieva of Foley Hoag LLP, 1717 K Street NW, Washington, DC 20006-5342, United States. India is further represented by Messrs. Thomas Bevilacqua and Antoine Lerosier of Foley Hoag AARPI, 153 rue du Faubourg Saint-Honoré, 75008 Paris, France.

7.

The provisions of the France-India BIT that are relevant are set out below.

8.

Article 1(1) of the France-India BIT states:

The term "investment" means every kind of asset, such as goods, intellectual property rights and other rights and interest of whatever nature, invested in the area of the Contracting Party in accordance with the laws of that Contracting Party, and in particular though not exclusively includes:

a) Moveable and immovable property as well as any other rights in rem such as mortgages, liens, usufructs and pledges, and similar rights;

b) Shares and other kinds of interest including minority or indirect forms, in companies constituted in the territory of one Contracting Party;

c) Debentures or rights to money, or to any legitimate performance having a financial value;

d) Business concessions conferred by law or under contract, including concessions to search for, extract or exploit natural resources, which are located in the maritime area of the Contracting parties [sic].

9.

Article 2(1) of the France-India BIT provides:

[The BIT] shall apply to any investment made by investors of either Contracting Party in the area of the other Contracting Party, including an indirect investment made through another company, wherever located, which is owned to an extent of at least 51 percent by such investors, whether made before or after the coming into force of this Agreement.

10.

Article 4(1) and (2) of the France-India BIT states:

The investments made by investors of one Contracting Party shall enjoy full and complete protection and safety in the area of the other Contracting Party.

Each Contracting Party shall extend fair and equitable treatment in accordance with internationally established principles to investments made by investors of the other Contracting Party in its area and shall permit the full exercise of this right in principle and in practice...

11.

Articles 5(1) and 5(2) of the France-India BIT state:

Each Contracting Party shall accord to investments of investors of the other Contracting Party, including their operation, management, maintenance, use, enjoyment or disposal by such investors, treatment which shall not be less favourable than that accorded to investments of its investors, or than the most favourable treatment accorded to investors of any third country, whichever is more favourable.

In addition each Contracting Party shall accord to investors of the other Contracting Party, including in respect of returns on their investments, treatment which shall not be less favourable than that accorded to investors of any third State.

12.

Article 6(1) of the France-India BIT states:

Neither Contracting Party shall take any measure of expropriation or nationalisation or any other measures having the effect of dispossession, direct or indirect, of investors of the other Contracting Party of their investments in its area, except in the public interest and provided that these measures are not discriminatory or contrary to a specific obligation entered into by Contracting Party [sic] not to take a measure of dispossession.

13.

Article 9 of the France-India BIT states:

Any dispute concerning the investment occurring between one Contracting Party and an investor of the other Contracting Party shall, if possible. [sic] be settled amicably between the two parties concerned.

Any such dispute which has not been amicably settled within a period of six months from written notification of a claim may be sumitted [sic] to international conciliation under the Conciliation Rules of the United Nations Commission on International Trade Law, if the parties so agree.

Notwithstanding paragraph 2. [sic] the dispute may be referred to arbitration at any time as follows: [...] (b) if the investor so decides, the dispute shall be referred to an ad hoc arbitral tribunal in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law, as adopted by the General Assembly on December 15, 1976 [...]

14.

Article 31 of the Vienna Convention on the Law of Treaties, dated 23 May 1969 ("VCLT"), sets forth the Convention’s general rule of treaty interpretation:

1) A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

2) The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

a. any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;

b. any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

3) There shall be taken into account, together with the context:

a. any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

b. any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

c. any relevant rules of international law applicable in the relations between the parties.

4) A special meaning shall be given to a term if it is established that the parties so intended.

15.

Article 32 of the VCLT states:

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

a. Leaves the meaning ambiguous or obscure; or

b. Leads to a result which is manifestly absurd or unreasonable.

16.

On 31 March 2014, LDA submitted a Notice of Arbitration ("Notice of Arbitration"), invoking the Treaty and the Arbitration Rules of the United Nations Commission on International Trade Law 1976 (the "UNCITRAL Rules").

17.

On 17 April 2014, LDA appointed Professor Julian D.M. Lew, QC as first arbitrator. On 8 July 2014, LDA requested that pursuant to Article 7(2) of the UNCITRAL Rules, the Secretary-General of the Permanent Court of Arbitration ("PCA") appoint the second arbitrator. On 10 July 2014, the PCA wrote to India inviting its comments on LDA's request by 28 July 2014, and by letter dated 31 July 2014, the PCA granted India an extension until 11 August 2014. India replied by letter dated 8 August 2014, in which it appointed Mr. J. Christopher Thomas, QC as second arbitrator.

18.

On 8 September 2014, in accordance with Article 9(3)(b) of the France-India BIT, the co-arbitrators appointed Ms. Jean E. Kalicki as Presiding Arbitrator.

19.

On 3 November 2014, the Parties and members of the Tribunal signed the Terms of Appointment.

20.

On 9 March 2015, LDA submitted its Statement of Claim ("Statement of Claim"), together with accompanying exhibits and legal authorities, ten witness statements¹ and one expert report.²

21.

The Tribunal held a preliminary procedural meeting with the Parties on 25 March 2015 in The Hague. During that meeting, India indicated that it intended to request bifurcation of the proceedings so that jurisdictional objections might be considered as a preliminary question.

22.

On 13 April 2015, the Tribunal issued Procedural Order No. 1 ("PO1"), which set forth two alternative procedural timetables, one envisaging the potential future bifurcation of the proceedings, and the other envisaging no such bifurcation.

23.

On 7 July 2015, in accordance with PO1, India filed its Statement of Defense, Counter-Memorial on Jurisdiction and Admissibility ("Counter-Memorial on Jurisdiction"), and Request for Bifurcation ("Bifurcation Request"), along with exhibits and legal authorities. India's Bifurcation Request referenced eleven separate objections to jurisdiction ("Objections")³ set out in its Counter-Memorial on Jurisdiction, and requested bifurcation of the proceedings to allow each issue to be addressed as a preliminary question prior to any examination of the merits.

24.

On 28 July 2015, LDA filed its response to India's Request for Bifurcation ("Bifurcation Response"), along with exhibits and legal authorities.

25.

On 13 August 2015, the Tribunal issued Procedural Order No. 2 ("PO2"), in which it granted India's request for bifurcation in respect of the first and second of India's Objections ("First Objection" and "Second Objection"), and denied India's request for bifurcation in respect of the remaining Objections.

26.

On 11 September 2015, the Tribunal issued Procedural Order No. 3 ("PO3"), in which it fixed the procedural timetable in accordance with the Parties' agreement.

27.

Pursuant to the agreed timetable, on 18 September 2015, LDA submitted its Reply on Jurisdiction related to the First and Second Objections ("Reply on Jurisdiction"). On 23 October 2015, India submitted its Rejoinder on Jurisdiction related to the First and Second Objections ("Rejoinder on Jurisdiction").

28.

On 5 November 2015, a bifurcated jurisdictional hearing was held at the International Dispute Resolution Centre in London. LDA was represented at the hearing by Professor Vaughan Lowe QC, Dr. Tariq Baloch, Mr. Farhad Sorabjee, and Ms. Arti Raghavan. India was represented by Messrs. Clodfelter, Bevilacqua, Klinger, and Lerosier, Dr. Salonidis, and Ms. Sands, assisted by Mmes. Kalinowski and Schmidt.

29.

On 22 December 2015, the Tribunal issued its Decision on Jurisdiction. The Tribunal dismissed India's First Objection, which had contended that LDA failed to comply with certain alleged preconditions to arbitration in Article 9 of the Treaty, including an obligation to attempt amicable settlement in good faith and to wait at least six months before commencing arbitration. With respect to LDA's Second Objection, the Tribunal found that LDA "may not proceed under Article 2(1) of the Treaty with a claim with respect to its indirect investment" in Haldia Bulk Terminals Private Limited (formerly ABG Haldia Bulk Terminals Private Limited) ("HBT"), which was structured through an entity in which LDA owned less than 51 percent, but that it "may proceed under Article 2(1) of the Treaty with a claim with respect to its direct investments in India,"⁴ provided that a direct investment claim was not "simply a restatement of the indirect investment claim that is excluded from BIT protection under Article 2(1)."⁵ Accordingly, the Tribunal invited LDA to indicate, within 30 days of the issuance of its Decision on Jurisdiction, whether it intended to rest on its pleadings as already submitted with respect to such "direct investment" claims, or whether LDA would seek an opportunity to amend or supplement its claims in this regard.

30.

By letter dated 30 December 2015, India expressed its concern that amendments to LDA's Statement of Claim would make it impossible for India to respond to such amendments within the timeframe for the submission of its Counter-Memorial, as originally envisioned in the procedural timetable. India requested the Tribunal to suspend the schedule outlined in PO3, until "such time as [the] Claimant has set forth its arguments to support claims under the new [jurisdictional] theory."⁶ On 31 December 2015, the Tribunal invited LDA's comments on India's letter.

31.

On 2 January 2016, LDA wrote, via e-mail, to note that the Tribunal's Decision on Jurisdiction provided a 30-day period for LDA to indicate whether it intended to seek leave to amend or supplement its Statement of Claim. On 15 January 2016, LDA requested such leave, i.e., to make "limited amendments to, and supplement its submissions in [its] Statement of Claim, supported by a brief supplementary report of its expert accountant," and proposed to do so by 15 February 2016.⁷ On the same date, the Tribunal invited India's comments on LDA's proposed deadline and further invited the Parties to "confer, and, where possible, agree on the necessary adjustments to the procedural timetable" by 29 January 2016.⁸ India indicated that it had no objection to LDA's extension request on 20 January 2016.

32.

On 27 January 2016, LDA informed the Tribunal that the Parties had been unable to reach an agreement on the procedural timetable, in particular, on the need (or lack thereof) for incorporating a potential second bifurcation stage. In the absence of agreement, LDA attached its own proposed timetable.

33.

On 1 February 2016, in response to a request for comment from the Tribunal dated 27 January 2016, India submitted its own proposed modifications to the procedural timetable and reiterated its position that any modifications to the procedural timetable should incorporate an opportunity for India to file a second application for bifurcated consideration of potential jurisdictional objections at a preliminary stage of the proceedings.

34.

On 15 February 2016, LDA requested, and the Tribunal granted, an extension until 17 February 2016 for the submission of its Amended Statement of Claim. On 17 February 2016, LDA submitted its Amended Statement of Claim, together with a supplemental expert report.⁹ LDA submitted a corrected version of its Amended Statement of Claim on the following day.

35.

Also on 17 February 2016, India renewed its request to the Tribunal that the procedural timetable incorporate a stage for bifurcated consideration of potential further jurisdictional objections. LDA opposed India's request in a letter dated 18 February 2016.

36.

On 23 February 2016, the Tribunal issued Procedural Order No. 4 ("PO4"), permitting India to make a second application for bifurcation of proceedings and ordering that certain modifications be made to the procedural timetable.

37.

On 28 March 2016, India submitted its Amended Statement of Defense, Counter-Memorial on Further Objections to Jurisdiction and Admissibility ("Second Counter-Memorial on Jurisdiction"), and Request for Bifurcation of its Further Objections to Jurisdiction and Admissibility ("Second Bifurcation Request"), with additional exhibits and legal authorities. In its Second Bifurcation Request, India argued inter alia that LDA's reformulation of its claims in the Amended Statement of Claim was insufficient to overcome the obstacles to jurisdiction India previously had raised, including the Article 2(1) issue on which the Tribunal had commented in its Decision on Jurisdiction.

38.

LDA submitted its response to India's Second Bifurcation Request on 11 April 2016 ("Second Bifurcation Response"), requesting that the Tribunal deny the request. Both Parties submitted additional comments on 14 and 15 April 2016, respectively.

39.

On 11 May 2016, the Tribunal issued Procedural Order No. 5 ("PO5"), in which it denied India's Second Bifurcation Request, concluding inter alia that it was "not convinced" that the renewed objection based on Article 2(1) of the Treaty "can be decided simply as a matter of law, without grappling with the evidence regarding the challenged conduct and the considerations that drove that conduct," including among other things "the Respondent's knowledge and intentions" with respect to LDA and the company in which it held a direct investment (ALBA Asia Private Limited, formerly ABG-LDA Bulk Handling Private Limited) ("ALBA"), "separate from HBT." The Tribunal considered that "[t]hese issues of fact appear to be closely intertwined with the merits, likely requiring detailed review of documentary and witness evidence as well as an evidentiary hearing."¹⁰ The Tribunal preserved India's further Objections for consideration in conjunction with the merits; confirmed the procedural timetable as set forth in Timetable B in Appendix A to PO4; and deferred any ruling on an application for costs occasioned by the Second Bifurcation Request.

40.

By letter dated 17 May 2016, LDA requested, inter alia, a "minor revision" to the procedural timetable, as then amended.¹¹

41.

On 20 May 2016, India requested the Tribunal to "immediately suspend" the schedule as set out in the procedural timetable "until such time as Claimant... set[s] forth its arguments and evidence" in support of jurisdiction.¹² In India's view, LDA had failed to do this in its Amended Statement of Claim, and had only set out its full position in its submissions on India's Second Bifurcation Request. LDA and India submitted additional letters in response to each other's comments on 26 and 27 May 2016, respectively, with LDA submitting another letter in response on 30 May 2016.

42.

On 22 June 2016, the Tribunal issued its Procedural Order No. 6 ("PO6"), in which it: (i) denied India's application to suspend the briefing schedule pending additional submissions from LDA; (ii) denied India's application, in the alternative, to reconsider the Tribunal's decision in PO5 with respect to India's Second Bifurcation Request; (iii) cautioned that the Tribunal would only take into account in further proceedings the arguments and evidence presented in formal pleadings, not in ancillary procedural filings, and requested LDA to confirm whether it intended to rest on its Amended Statement of Claim for purposes of further proceedings, or wished to incorporate certain additional allegations it had raised in its Second Bifurcation Response into a Further Amended Statement of Claim, with the understanding that any such filing must be completed within four weeks; and (iv) adjusted the procedural timetable to run from the date of LDA's confirmation or, in the alternative, of its further filing. The Tribunal later clarified the manner in which the procedural timetable would run in a communication to the Parties dated 28 June 2016.

43.

On 20 July 2016, LDA submitted its Further Amended Statement of Claim ("Further Amended Statement of Claim"). The Tribunal issued an updated procedural timetable to the Parties on the same date.

44.

On 19 September 2016, the Parties wrote separately by e-mail to confirm that they had reached an agreement as to certain further modifications to the procedural timetable. On 10 October 2016, India proposed via e-mail a further revision to the procedural timetable, which LDA accepted in an e-mail of the same date. The Registry confirmed receipt and, on behalf of the Tribunal, informed the Parties that the proposed changes had been accepted.

45.

On 22 October 2016, India requested a ten-day extension of its deadline to submit its Counter-Memorial on Merits and Remaining Jurisdictional/Admissibility Issues and Memorial on Counterclaims. In an e-mail of the same date, LDA accepted the request. The Registry confirmed receipt and, on behalf of the Tribunal, informed the Parties that the requested extension had been granted.

46.

On 4 November 2016, India submitted its Counter-Memorial on Merits and Remaining Jurisdictional/Admissibility Issues and Memorial on Counterclaims ("Counter-Memorial") dated 3 November 2016. The Counter-Memorial was accompanied by ten witness statements¹³ and one expert report,¹⁴ along with exhibits and legal authorities. On 9 November 2016, India submitted a one-page errata sheet correcting certain citations in its Counter-Memorial, along with a corrected electronic version of the Counter-Memorial itself.

47.

On 21 November 2016, the Parties wrote separately to submit their respective Requests for Document Production. From 1 December 2016 to 12 December 2016, the Parties exchanged simultaneous responses and objections to each other's requests and replies to each other's objections. On 30 December 2016, LDA informed the Registry that the Parties had agreed on an extension of the deadline for the production of documents responsive to uncontested requests from 1 January 2017 to 9 January 2017.

48.

On 9 January 2017, the Tribunal issued Procedural Order No. 7 ("PO7") ordering both Parties to produce certain contested requested documents within the time limit set in the revised procedural timetable.

49.

On 20 January 2017, India wrote to the Tribunal informing it of the Parties' agreement to extend the timeline for supplemental production of documents to 10 February 2017. On 30 January 2017, LDA confirmed its agreement, requesting India to provide its supplemental documents on a rolling basis. On 21 January 2017, LDA completed producing its supplemental documents pursuant to PO7. On 17 February 2017, the Registry wrote to the Parties on behalf of the Tribunal, requesting India to complete its production by 24 February 2017. On 24 February 2017, India informed the Tribunal that it had completed the production of all documents in its possession, custody, or control that resulted from its thorough and diligent searches.

50.

On 16 March 2017, LDA submitted a request for the extension of the time available for filing its Reply to India's Counter-Memorial. On 17 March 2017, LDA informed the Registry of the Parties' agreement to extend the deadline of each of LDA and India's next pleadings to 17 April and 27 July 2017, respectively. India confirmed their agreement on the same date. On 20 March 2017, LDA submitted a revised timetable as agreed by the Parties.

51.

On 17 April 2017, LDA submitted its Reply to India's Counter-Memorial ("Reply"), accompanied by eight supplemental witness statements¹⁵ and a further supplemental expert report,¹⁶ along with exhibits and legal authorities.

52.

On 25 July 2017, India informed the Tribunal that the Parties had agreed to extend the deadline for submission of each of LDA and India's next pleadings, due on 27 July and 27 August 2017, to 6 August and 6 September 2017, respectively. On 7 August 2017, these deadlines were further extended by the Parties' agreement to 8 August and 10 September 2017, respectively.

53.

On 8 August 2017, India submitted a Rejoinder on The Merits and Remaining Jurisdictional/Admissibility Issues and Reply on Counterclaim ("Rejoinder"), accompanied by nine supplemental witness statements¹⁷ and a supplemental expert report,¹⁸ along with exhibits and legal authorities.

54.

On 28 August 2017, LDA made an application to the Tribunal seeking directions in respect of: (i) documents that LDA claimed were "improperly withheld by [India];" and (ii) documents provided as exhibits to Respondent's Rejoinder which LDA argued were incomplete in material respects, illegible, or not translated. On 1 September 2017, India wrote to the Tribunal, requesting it to reject LDA's application. LDA and India provided further comments on 3 September and 4 September 2017, respectively.

55.

On 5 September 2017, India resubmitted certain exhibits to its Rejoinder.

56.

On 6 September 2017, the Tribunal issued Procedural Order No. 8 ("PO8"), ordering India to use its best efforts to locate more legible copies of certain exhibits, and to inform LDA within two weeks of the outcome of the search it had undertaken to perform in respective of certain requested documents.

57.

On 10 September 2017, LDA submitted its Rejoinder to the Counterclaim ("Rejoinder to Counterclaim").

58.

On 21 September 2017, India provided LDA with the documents referred to in PO8 that it was able to locate after a diligent search and a more legible copy of Exhibit R-252.

59.

On 11 October 2017, the Registry, on behalf of the Presiding Arbitrator, provided the Parties with a draft Agenda for the pre-hearing conference, containing proposals on certain organizational and procedural aspects for the hearing to be held between 27 November and 1 December 2017, resuming for two additional days on 3 December and 4 December 2017 (the "Hearing"). The Parties were invited to consult directly to reach agreement to the greatest extent possible on the matters set out therein, and to deliver their comments, either jointly or separately, by no later than two days before the scheduled date of the call. Between 23 October and 31 October 2017, the Parties provided their views on the items listed in the draft Agenda. On 31 October 2017, the pre-hearing conference was held.

60.

On 27 October 2017, India notified the Tribunal that it sought to examine at the Hearing the following witnesses produced by LDA: (i) Mr. Babu Rajeev; (ii) Mr. Gildas Maire; (iii) Mr. Gurpreet Malhi; (iv) Mr. Hans Starrenburg; (v) Mr. Jean-Michel Pap; (vi) Mr. Manpreet Jolly; (vii) Mr. Olivier Morel-Jean; (viii) Mr. Pradip Ghosh; (ix) Mr. Saket Agarwal; (x) Mr. Yogesh Agarwalla; and (xi) Mr. James Gilbey.

61.

On 30 October 2017, LDA notified the Tribunal that it sought to examine at the Hearing the following witnesses produced by India: (i) Mr. M. Jain; (ii) Mr. S. Jain; (iii) Mr. A.K. Dutta; (iv) Mr. D. Nayak; v) Mr. S.K. Saha Roy; (vi) Mr. A.K. Mahapatra; (vii) Mr. R.K. Shukla; (viii) Mr. M.L. Meena; (ix) Mr. N. Muruganandam; and (x) Mr. T.H. Hart.

62.

On 1 November 2017, the Parties submitted to the Tribunal an agreed list of dramatis personae.

63.

On 4 November 2017, the Tribunal issued Procedural Order No. 9 ("PO9") regarding the organizational and procedural aspects of the Hearing.

64.

On 7 November 2017, the Parties submitted to the Tribunal an updated agreed list of dramatis personae, with the individuals listed in alphabetical order, as requested by the Tribunal.

65.

On 8 November 2017, pursuant to PO9, the Parties submitted to the Tribunal an agreed chronology of events ("Agreed Chronology of Events").

66.

On 9 November 2017, the Tribunal notified the Parties that it maintained its prior ruling regarding examination of witnesses in person rather than by video-conference, "absent any previously unknown or exigent circumstances, for example involving health, that would justify reconsideration of the Tribunal’s prior decision."

67.

On 15 November 2017, pursuant to PO9, the Parties submitted a single consolidated USB key containing the Parties’ submissions, expert reports, witness statements, and exhibits and authorities.

68.

On 20 November 2017, LDA sought the Tribunal’s assistance in securing the presence at the Hearing of its witness, Mr. Jolly. On 21 November 2017, India requested the Tribunal to consider allowing Mr. S. Jain to be examined by video-conference because Mr. S. Jain might be unable to secure the necessary approvals to attend the Hearing in person.

69.

On 22 November 2017, the Tribunal issued Procedural Order No. 10 ("PO10"), in which it inter alia directed LDA to convey to Mr. Jolly his duty as a witness to make himself available for questions at the Hearing. The Tribunal accepted the potential video-conference alternative for the examination of Mr. Jolly and Mr. S. Jain given the circumstances, but reiterated its strong preference that witnesses appear in person if possible rather than by video-conference.

70.

The Hearing took place at the International Dispute Resolution Centre, London on 27 November to 1 December, and 3-4 December 2017. The following individuals attended:

Arbitral Tribunal
Ms. Jean E. Kalicki (Presiding Arbitrator)
Professor Julian D.M. Lew QC
Mr. J. Christopher Thomas QC

Claimant
Dr. Tariq Baloch
Mr. Cameron Miles
(3 Verulam Buildings)

Mr. Georgios Petrochilos
Ms. Eleonore Gleitz
(Three Crowns LLP)

Mr. Farhad Sorabjee
Ms. Arti Raghavan
Ms. Deepika Bhargava
Ms. Shanaya Irani
Ms. Natalia Ivanova
(J. Sagar Associates)

Mr. Philippe Louis-Dreyfus
Mr. Antoine Person
(LDA's representatives)

Mr. Gildas Maire
Mr. Hans Starrenburg
Mr. Gurpreet Malhi
Mr. Jean Michel-Pap
Mr. Saket Agarwal
Mr. Babu Rajeev
Mr. Olivier Morel-Jean
Mr. Pradip Ghosh
Mr. Yogesh Agarwala
Mr. Manpreet Jolly
Mr. James Gilbey
(LDA's witnesses and expert)

Respondent
Mr. Mark A. Clodfelter
Ms. Janis H. Brennan
Mr. Constantinos Salonidis
Mr. Ofilio J. Mayorga
Ms. Shrutih Tewarie
Mr. Joseph Klingler
Mr. Sudhanshu Roy
Mr. Oscar Norsworthy
Ms. Kathern Schmidt
Ms. Angelica M. Villagran
Ms. Nancy M. Lopez Torres
(Foley Hoag LLP, Washington)

Mr. Thomas Bevilacqua
(Foley Hoag LLP, Paris)

Mr. Sambit Triphaty
Mr. A.R. Sengupta
Mr. N. Muruganandam
Mr. Anant K. Saran
(India's representatives)

Mr. Amol K. Dutta
Mr. Abhay K. Mahapatra
Mr. Swapan K. Saha Roy
Mr. Madan L. Meena
Mr. Narayanaswami Muruganandam
Mr. Damodar Nayak
Mr. Ravi K. Shukla¹⁹
Mr. Sukesh K. Jain²⁰
Mr. Manish Jain
Mr. Timothy H. Hart
(India's witnesses and expert)

PCA
Ms. Jennifer Nettleton-Brom

Other
Ms. Emily Choo, National University of Singapore Centre for International Law Practice Fellow

Court reporters
Ms. Laurie Carlisle
Ms. Diana Burden

Interpreters
Mr. Shakil Mustafizure Rahman
Mr. Abdul Jain

71.

At the Hearing, all of the witnesses that were notified by the Parties were examined either in person or by video-conference, except for Mr. Jolly who, according to LDA, was no longer in its control and had declined to participate further. At the Hearing, India indicated its intention to file a written application to have the witness statement of Mr. Jolly disregarded.

72.

Further, during the course of his examination, Mr. S. Jain proffered new documents related to the law and order situation at HDC on specific dates, which LDA objected it had not previously had the opportunity to review and which (in its view) prompted questions about the thoroughness of India's prior production of relevant and material documents. The Tribunal requested India to verify after the Hearing whether there were any additional documents of the same nature that had not yet been produced, regarding incidents at HDC between the Notice of Suspension and the Notice of Termination ("Additional Document Verification"). The Tribunal requested that arrangements be made for a supplemental examination of Mr. S. Jain upon completion of the Additional Document Verification.

73.

On 12 December 2017, LDA explained the grounds on which it would resist any application by India to exclude the witness statement of Mr. Jolly from the record, and requested leave to submit a witness statement of Mr. Bhushan Patil should India proceed with its application.

74.

On 22 December 2017, India requested the Tribunal to consider Mr. Jolly's witness statement only to the extent that it contradicted LDA's case on the merits, a request to which LDA responded on 5 January 2018.

75.

On 31 December 2017, India proposed a protocol for conduct of the Additional Document Verification, on which LDA provided comments on 5 January 2018. India provided further comments regarding this issue on 10 January 2018.

76.

On 11 January 2018, the Parties submitted their corrections to the Hearing transcripts.

77.

On 11 January 2018, the Tribunal issued Procedural Order No. 11 ("PO11"), in which it inter alia determined that Mr. Jolly's witness statement would remain in evidence but the Tribunal would apportion only such weight to its various assertions as it considered appropriate in the circumstances, and declined LDA's proffer of an additional witness statement from Mr. Patil.

78.

On 18 January 2018, India supplied electronic and hard copies of the documents resulting from the Additional Document Verification.

79.

The supplemental examination of Mr. S. Jain took place on 29 January 2018 at the International Dispute Resolution Centre, London. The following individuals were present:

Arbitral Tribunal
Ms. Jean E. Kalicki
Professor Julian D.M. Lew QC
Mr. J. Christopher Thomas QC

Claimant
Dr. Tariq Baloch
(3 Verulam Buildings)

Mr. Georgios Petrochilos
Ms. Eleonore Gleitz
(Three Crowns LLP)

Mr. Farhad Sorabjee
Ms. Arti Raghavan
(J. Sagar Associates)

Respondent
Mr. Mark A. Clodfelter
Mr. Constantinos Salonidis
Mr. Ofilio J. Mayorga
Mr. Sudhanshu Roy
Ms. Angelica Villagran
(Foley Hoag LLP, Washington)

Mr. Anant K. Saran
(India's representatives)

Mr. Sukesh K. Jain
(India's witness)

PCA
Ms. Jennifer Nettleton-Brom

Other
Ms. Emily Choo, National University of Singapore Centre for International Law Practice Fellow

Court reporters
Ms. Laurie Carlisle
Ms. Diana Burden

80.

On 13 February 2018, the PCA circulated corrected transcripts of the Hearing to the Parties.

81.

On 30 March 2018, LDA submitted its post-hearing brief ("LDA’s Post-Hearing Brief") to the PCA.

82.

On 3 April 2018, India submitted its post-hearing brief ("India’s Post-Hearing Brief") to the PCA.

83.

On 3 April 2018, the PCA circulated both LDA's and India's Post-Hearing Briefs to the Tribunal and to the Parties.

84.

On 5 April 2018, India objected to LDA's submission of certain new factual allegations in its cover letter dated 30 March 2018 and new legal authorities in its Post-Hearing Brief. On 6 April 2018, LDA responded to India's objections noting that "it is misconceived to seek to confine the Tribunal's knowledge of the law to sources cited by the parties" and that "a number of [the new legal authorities] were referred to in the course of oral argument in November 2017."

85.

On 6 April 2018, LDA submitted a corrected Post-Hearing Brief, noting that the corrected version addressed "certain minor formal errors/omissions." On 16 April 2018, India commented on LDA's corrections. On 17 April 2018, LDA responded to India's comments.

86.

On 1 May 2018, the PCA circulated to the Parties the Tribunal’s decision that (i) any new factual allegations in LDA’s cover letter are outside the scope of these proceedings; (ii) the matter regarding the new legal authorities to which LDA made reference in its Post-Hearing Brief will be taken under advisement, and in the event the Tribunal considers that any such authorities would have a material effect on its analysis, it will offer an opportunity of response with respect to such authorities; and (iii) no prejudice has been created by LDA’s corrections and/or additions, and that therefore, the Tribunal accepts the updated version as submitted.

87.

Following certain extensions granted by the Tribunal, LDA and India filed their respective cost submissions, dated 10 May 2018 and 18 May 2018 respectively, with the PCA ("LDA’s Cost Submission" and "India’s Cost Submission"). On 19 May 2018, the PCA transmitted both documents simultaneously to the Tribunal.

88.

As reformulated in LDA’s Further Amended Statement of Claim, LDA seeks declaratory and compensatory relief based on India’s alleged violation of its rights as an investor in ALBA, by virtue of the "destruction of... assets" belonging to a company in which ALBA held shares (HBT).²¹ In particular, HBT’s value was said to have been linked to its rights under a contract dated 16 October 2009 for the "supply, operation and maintenance of different cargo handling equipment at Berth No. 2 & 8 of Haldia Dock Complex," between HBT and the Board of Trustees for the Port of Kolkata ("KoPT"). This contract is hereafter referred to as the "Contract,"²² and the operations it anticipated are referred to as the "Project." LDA alleges that "the destruction of the Project resulted in heavy losses to ALBA and therefore, to the Claimant."²³

89.

As discussed further herein, ALBA is a joint venture company incorporated under the laws of India, owned by LDA and ABG Ports Limited, also a company incorporated under the laws of India ("ABG Ports").²⁴ As of the events in question, LDA held 49% of ALBA’s shares, and ABG Ports held the remaining 51 percent.²⁵ ALBA in turn held a 63% equity stake in HBT, with the balance of 37% held directly or indirectly by ABG Infralogistics ("ABG Infra"), the parent of ABG Ports. LDA alleges that as a result of certain arrangements, including preferential shares, ALBA was entitled to a 98.78% share of HBT's profit.²⁶

90.

LDA alleges that India's acts and omissions resulted in the premature termination of the Contract on 31 October 2012.²⁷ LDA divides those acts and omissions into three chapters.²⁸ LDA's first chapter alleges that India obstructed HBT from "operationalizing" the Project by, inter alia: (i) KoPT acting to prevent the Contract from becoming effective; (ii) the Indian police failing to ensure safe passage of HBT's cargo handling equipment to the Berths; and (iii) KoPT coercing HBT to employ redundant workers and engage redundant sub-contractors, which resulted in financial strain to HBT.²⁹ LDA's second chapter argues that KoPT "choked" HBT's finances by deciding not to optimize the use of the Berths through maximum cargo allocation, and by failing to make timely payments to HBT.³⁰ LDA's third chapter argues that HBT was ultimately "forced" to terminate the Contract. LDA submits that HBT was "[u]nable to withstand the continued financial pressure and administrative hostility" and so issued a Notice of Suspension of Operations on 23 August 2012 ("Notice of Suspension"). This ultimately led to a settlement by way of a Consent Order issued by the Calcutta High Court on 12 September 2012 ("Consent Order"), which, inter alia, "remind[ed] KoPT of its commitment to prioritize the allocation of cargo to [HBT's Berths]."³¹ To control costs and salvage the Project, HBT also retrenched the excess workers and subcontractors it allegedly had been forced to take on.³² HBT then was "subjected to a violent backlash," including "mobs preventing operations, assaulting HBT personnel..., and threatening their personal security," to which KoPT, the police, the District Magistrate, and the Ministry of Shipping ("MoS") allegedly were unresponsive.³³ The crisis culminated in the alleged abduction at gunpoint of three HBT employees and their families.³⁴ LDA states that it and its Indian collaborator, ABG Infra, "could not compromise on the security of personnel on the Project and resolved to end their participation in the Contract," resulting in HBT having "no choice but to terminate the Contract."³⁵ LDA adds that KoPT thereafter undertook "vindictive actions harming HBTin the aftermath of its exit," including imposing a lien on equipment, engineering a "patently mala fide claim through the commissioner of customs," and subjecting HBT to a "manifestly unfair blacklisting procedure."³⁶

91.

At the heart of LDA's case is the proposition that India's State authorities (allegedly including KoPT) either affirmatively conspired to favor, or at minimum failed to protect LDA against the concerted hostile efforts of, certain powerful "Vested Interests" at HDC. The Vested Interests are said to have included both the local stevedoring company Ripley & Co. Ltd ("Ripley") and local union leaders affiliated with the Indian Trinamool Trade Union Congress ("INTTUC"), all of whom were connected to the ruling political party in West Bengal, the All India Trinamool Congress Party ("TMC").³⁷ According to LDA, the Vested Interests worked in conjunction to destroy HBT's operations, by threatening HBT personnel and vandalizing and sabotaging HBT's operations, premises, and equipment.³⁸ LDA suggests that the Vested Interests changed KoPT's board composition to ensure its compliance with their interests,³⁹ and exercised control over both the MoS and the state government in West Bengal to the detriment of HBT.⁴⁰ LDA maintains that these authorities not only were aware of the Vested Interests, but also either directly supported them or failed to protect HBT from them.⁴¹ LDA defines the "central issue of [its] case" as involving "the sabotage of the Contract by instrumentalities of the Respondent state at the behest of the Vested Interests," with "[t]hese instrumentalities therefore act[ing], or fail[ing] to act, to serve the purposes of the Vested Interests."⁴²

92.

LDA develops this theme in its Post-Hearing Brief, where it summarizes its core case as follows:

The Claimant's case is that at the behest of "Vested Interests" … various instrumentalities of India first tried to frustrate the commissioning of the Project and then to choke it financially by under-allocating cargo to HBT and forcing it to take on a wildly excessive labour force. When the Project was finally put on track, in September 2012, there erupted widespread disorder and violence, culminating in risk to human lives. This risk LDA (and its Indian partner ABG Infra) were not prepared to take; and they were forced to abandon the Project, thereby losing the investment that ALBA had made in HBT. To make matters worse, even after this forced exit, India continued to take punitive actions against LDA.⁴³

93.

LDA asserts that India's conduct was in breach of the following Treaty provisions⁴⁴:

• Article 6(1), which prevents India from taking "any measure of expropriation or nationalisation or any other measures having the effect of dispossession, direct or indirect," unless it satisfies the conditions laid out in that Article;

• Article 4(2), which obliges India to "extend fair and equitable treatment in accordance with internationally established principles" to the investments of French investors in India;

• Article 4(1), which provides that investments made by French investors "shall enjoy full and complete protection and safety" in India; and

• Article 5, which requires India to accord French investments "treatment which shall not be less favourable than that accorded to" either national or third-State investments, and to accord to French investors "treatment which shall not be less favourable than that accorded to" third-State investors.

94.

With respect to relief, LDA claims that India "has a duty to make full reparation" in "the form of a monetary award reflecting the loss of the value of the Claimant's shareholding in ALBA which value was substantially eroded on account of the Respondent's violations of the Treaty," and in the form of "damages for moral and reputational harm suffered by the Claimant, associated economic losses, and a formal and unqualified apology by the Respondent."⁴⁵

95.

Specifically, in its Reply, LDA requests the following relief:

a. DECLARE that India has breached the Treaty.

b. In respect of the Respondent's Counterclaims:

i) DISMISS India's Counterclaims for lack of jurisdiction.

ii) Should the Tribunal uphold jurisdiction over the Respondent's counterclaims, DISMISS these counterclaims on the merits.

c. ORDER India to compensate the Claimant for its breaches of the Treaty, in the aggregate.

d. ORDER India to compensate the Claimant for its breaches of the Treaty, in the aggregate amount of USD 36,155,825, plus further interest accruing from 1 January 2016 to the date of full and effective payment of compensation.

e. ORDER India to compensate the Claimant the amount of USD 4.5 million, for moral and reputational harm, caused by India's breaches of the Treaty.

f. ORDER India to pay all of the costs and expenses associated with the Anti-Arbitration Proceedings, as described in ¶¶ 349 to 355 of [the Further Amended Statement of Claim] and Chapter XI above.

g. DECLARE that:

i) the award of compensation and interest above be made net of all Indian taxes; and

ii) India may not deduct taxes in respect of the payment of the award of compensation and interest above.

h. ORDER India to indemnify the Claimant

i) for any taxes India assesses on the award of compensation and interest above; and

ii) in respect of any double taxation liability that would arise in France or elsewhere that would not have arisen but for India's adverse measures.

i. ORDER India to make a formal and unqualified apology to HBT's staff for its egregious failure to protect their physical security, and in particular those persons and their family [sic] who were abducted: Manpreet Jolly, Jagdish Behara, Bhushan Patil and his wife and daughter;

j. ORDER India to pay all of the costs and expenses of this arbitration, including the fees and expenses of the Tribunal, the fees and expenses of any experts appointed by the Tribunal and the Claimant, the fees and expenses of the Claimant's legal representation in respect of this arbitration, and any other costs of this arbitration.

k. AWARD such other relief as the Tribunal considers appropriate.⁴⁶

96.

India disputes as a threshold matter that the Tribunal has jurisdiction over these claims and that the claims are admissible.⁴⁷ With respect to the merits, India denies that it has violated any of the standards of protection set forth in the Treaty, and that it is responsible for any loss incurred by LDA as a result of the violations alleged.⁴⁸

97.

To the contrary, in India's telling, KoPT was committed to increasing HDC's competitiveness through mechanization of operations at the Berths, and the Project's failure was due to "the bad business decisions [LDA] made with its partners, and not any neglect of duty or wrongful acts" by KoPT or India.⁴⁹ India contends that the bid was "overly aggressive" and made without adequate knowledge of local conditions, and relied on "overly optimistic projections of cargo" and "wholly unrealistic assumptions about labor relations at HDC."⁵⁰ In consequence, LDA's investment was "doomed to suffer," and its lack of preparation "led to significant operational shortcomings, which degenerated even further as the global economic downturn and increased competition from other ports began affecting overall cargo volumes handled at Haldia."⁵¹ According to India, the best evidence that there was no conspiracy to shut HBT down is that it was able to operate the Project "peacefully and undisturbed for more than two years,"⁵² until its own economic difficulties led it to "seek a way out" under "false pretexts for first threatening, and then actually carrying out, the suspension and eventual termination of the Contract without any legal justification."⁵³ This involved, inter alia, pressing for its Berths to be allocated cargo above all others, which "unsurprisingly led to complaints by workers at other berths," and then terminating its agreement with a labor supplier and retrenching a large number of its own workers, "knowing full well" that this would precipitate a crisis and "thereby provide the perfect excuse for exiting the stage."⁵⁴

98.

By contrast, India contends, KoPT (whose conduct it asserts is not attributable in any event to India) tried to support the Project, within the terms of the Contract and even in the face of local opposition.⁵⁵ The police and the Central Industrial Security Force ("CISF"), which is tasked with providing security at major ports in India, provided "adequate assistance" and "investigated each and every incident" that HBT reported.⁵⁶ HBT's eventual unlawful Contract termination imposed significant harm on KoPT, which acted appropriately thereafter to protect its interests.⁵⁷

99.

Based on this framing of events, India presents several "conditional" counterclaims, on which it seeks a ruling only if the Tribunal upholds jurisdiction to examine the merits of any of LDA's claims and the admissibility of such claims, and only if it finds KoPT's conduct to be attributable to India.⁵⁸ India's counterclaims are grounded on alleged losses suffered by KoPT after LDA terminated the Contract on 31 October 2012. India seeks compensation for: (i) losses suffered by KoPT resulting from the inability to conduct cargo operations from 23 September 2012 to 28 February 2013; (ii) costs of shifting ships not serviced by HBT at the Berths from 23 September 2012 to 31 October 2012; (iii) amounts paid to an interim short term contractor for onshore operations at the Berths from 10 October 2012 to 16 March 2013; (iv) loss of income that KoPT could have earned under the Contract from 1 March 2013 to 1June 2016; (v) recovery of outstanding bills and repair expenses; and (vi) recovery of charges and taxes for occupying space in the dock area.

100.

In its Rejoinder, India has requested the Tribunal to render an award:⁵⁹

i) in favour of India and against LDA, dismissing LDA's claims for lack of jurisdiction and/or as inadmissible in their entirety and with prejudice;

ii) should the Tribunal uphold jurisdiction to examine the merits of any of LDA's claims, and the admissibility of such claims, finding and declaring that India has not breached any obligation owed to LDA under the Treaty;

iii) should the Tribunal uphold jurisdiction to examine the merits of any of LDA's claims, and the admissibility of such claims, finding and declaring that India has not caused any loss to LDA or, in the alternative, is not obligated to pay LDA damages, interest or costs in the amounts claimed;

iv) should the Tribunal uphold jurisdiction to examine the merits of any of LDA's claims, and the admissibility of such claims, as such holding relates to the conditions for India's Counterclaim, finding and declaring that HBT has breached the Contract and that LDA is responsible for those breaches and award India damages in the amount of Rs 2,27,80,49,212.58 together with interest thereon;

v) pursuant to paragraphs 1 and 2 of Article 40 of the UNCITRAL Arbitration Rules, ordering that LDA bear all the costs of this arbitration, including India's costs for legal representation and assistance, together with interest thereon; and

vi) grant such other relief that the Tribunal may deem legally available to India.

101.

The Tribunal describes below in some detail, as a useful predicate for the discussion that follows, the facts that are agreed or that the Tribunal has found to be proven by the evidence. Nonetheless, the Tribunal does not purport to set out all facts considered for purposes of this Award, and the absence of reference to particular facts or assertions, or to the evidence supporting any particular fact or assertion, should not be taken as an indication that the Tribunal did not consider those matters. The Tribunal has carefully considered all evidence and argument submitted to it in the course of these proceedings.

102.

On 13 August 2007, KoPT recommended the mechanization of Berth Nos. 2 and 8at HDC for the purposes (in the Parties' agreed description) of "improving productivity and capacity augmentation."⁶⁰

103.

On 13 November 2007, KoPT floated Tender No. Ad/Equipping/2007-08 for "Supply, Operation & Maintenance of Different Cargo Handling Equipment" at the Berths ("Tender").⁶¹ The Tender envisioned that onboard and onshore cargo handling operations would be contracted out to a single entity and priced on a "service model," under which KoPT would directly charge end-users for their ships' use of the Berths, and then would pay the winning contractor a portion of its revenues pursuant to a contract that (a) required the cargo handler to use certain mechanized equipment (including "Mobile Harbor Cranes"), and (b) pegged rates to the volume of cargo handled, based on a rate per ton quoted by the contractor in its bid. This was a departure from traditional practice, in which onboard operations were handled by KoPT using the ships' built-in cranes, and onshore operations were conducted manually by stevedoring agents, who operated under a KoPT license but contracted directly with end-users for their rates of service.⁶²

104.

The Parties agree that the Project envisioned in the Tender was not only innovative but unprecedented at HDC. India describes it as a "first-of-its-kind project,"⁶³ and its witness A.K. Dutta characterizes it as a "turning point in HDC's history," "the first time KOPT opted for a model whereby a Contractor would carry out integrated shore handling services on behalf of the port," introducing mechanization to "displace the traditional stevedoring agencies."⁶⁴ LDA's opening statement referenced Mr. Dutta's description of the project as historic, and stated, "we agree."⁶⁵

105.

The Tender was a lengthy document, and was accompanied by a set of "Clarifications" issued in response to queries by potential tenderers. The Tribunal does not purport to summarize all of the terms of the Tender or the various Clarifications. For purposes of this dispute, the following provisions were of particular relevance.

106.

First, the "Scope of Work" was described as "[s]upply, installation, operation and maintenance of different cargo handling equipment as well as undertaking all required onboard and onshore cargo handling operations as given below in an integrated manner upto [sic] delivery / shipment in case of import / export at Berth nos. 2 & 8 … at the cost, charges, expenses, risk, manpower and arrangements of the successful tenderer."⁶⁶ In response to a query by one potential bidder, KoPT clarified that "the successful tenderer shall have to handle all kinds of vessels to be berthed by KoPT," without the right to refuse non-standard or very old vessels.⁶⁷ Nonetheless, the "cargo to be handled with the equipment to be supplied & installed and manpower deployed under the provision of the contract will predominantly comprise dry bulk cargo," and only in exigent circumstances would the tenderer be required to handle other types of cargo, with different rate terms provided.⁶⁸

107.

The Tender specified that "KoPT will not guarantee any minimum cargo for handling by the successful bidder. However, for the benefit of the tenderer, the past performance of handling cargo" at HDC was supplied in an appendix.⁶⁹ A separate provision similarly specified that "KoPT will not commit any Minimum Guaranteed Throughput of cargo for both the berths," but would furnish data on cargo handled in recent years.⁷⁰

108.

In response to a query from one tenderer suggesting that KoPT "should ensure that Berths 2 & 8 are provided with sufficient vessels to ensure that the equipments … are not idle at any point in time" and the "successful tenderer shall be allowed to do marketing" to end-users,⁷¹ KoPT issued the following Clarification:

Asper present policy of KoPT, commodities like coking Coal, Lime Stone, and Coke of the major steel industries are to be handled at the two berths concerned. However, whenever vessels a/c Steel Industries will not be there at these two berths, Commodities like Iron Ore, Non Coking Coal or any other bulk commodity as maybe decided by the port from time to time will also be handled at the two berths concerned.

As KoPT has adopted its own policy for utilization of berth no. 2 and 8 for maximizing cargo at these two berths, the matter of allowing the successful tenderer to do marketing has not been considered favourably.⁷²

KoPT also responded to several general inquiries on this subject. In response to the question, "How will the ports divide vessels equitably?", KoPT stated that "[t]his will be determined / governed by the policies of KoPT prevailing at the relevant point of time."⁷³ In response to a question whether KoPT would provide a "back to back cargo guarantee," it stated that it "will not provide any cargo guarantee to the tenderers."⁷⁴

109.

The Tender provided a list of the "Minimum number of equipment to be supplied, installed, operated and maintained at each of the berths,"⁷⁵ but expressly permitted the successful tenderer to deploy additional equipment "for the purpose of attaining the MLP."⁷⁶ The "MLP" was a "Minimum Level of Performance," and the successful tenderer "shall have to achieve MLP in terms of ship day output … failing which penalty will be imposed …."⁷⁷ Specifically, the Tender specified that "[t]he successful tenderer shall have to ensure handling of a minimum of 20000 tonnes of cargo per ship berth day at each of the berth,"⁷⁸ with calculations of "ship berth day output" based on total cargo loaded and unloaded from a vessel and the "Vessel operation time" running from the "time of readiness of the vessel at the berth … till completion time of loading / unloading of vessel."⁷⁹ The Tender stated that "[i]n case of failure to achieve MLP for the dry bulk cargo, KoPT shall make payment at reduced rate in the manner detailed …."⁸⁰

110.

The successful tenderer was required to "employ qualified and skilled personnel for operation and maintenance of all the equipment to be installed / provided as also for undertaking other onboard & onshore operations under the contract."⁸¹ The tenderer was also responsible for supplying, "at its cost, arrangement and liability," "[l]ocalized security for all the equipment and other infrastructure to be set up or deployed by the successful tenderer inside the dock …." At the same time, "KoPT will provide general security to the entire dock area at HDC by [CISF] as in existence now."⁸² "Strike, boycotts or other forms of labour unrest" would be considered a "Force Majeure Event" under the eventual contract if they "materially and adversely affect the successful tenderer in due performance of its various obligations under the contract," but the provision expressly "exclude[d] strike or boycotts by employees of the successful tenderer or by the employees of the agents/ representatives/ contractors/ sub-contractors engaged by the successful tenderer."⁸³ In response to a query about the status of a "Bandh" (or general strike) called by a political party, KoPT clarified that "[t]he Bandh, if originated from the source outside the control of the successful tenderer" would qualify as a force majeure event.⁸⁴

111.

For purposes of due diligence by potential tenderers, the Tender provided certain sketch plans, but also provided that "intending tenderers [would] be given the opportunity to inspect the dock area" on3 December 2007, "to get an idea about the project site, location of the storage area(s) etc."⁸⁵ Regardless of whether a tenderer participated in the scheduled site inspection, it "shall be deemed to have inspected the project site and dock area including the available facilities and conditions prevailing thereon, before quoting the rates."⁸⁶

112.

Tenderers were required to have certain thresholds of experience handling dry bulk cargo using Mobile Harbor Cranes or other "Quay Crane(s)."⁸⁷ In response to a query whether a stevedoring agent would qualify if it previously had worked with other port authorities who operated such cranes, KoPT insisted that "[t]he tenderers must have their own experience of operating Mobile Harbor Cranes or any other quay crane(s)," and that stevedoring agents who had not done so would not be deemed to have the required "Essential Cargo Handling Experience."⁸⁸ The requirement of direct experience operating the cranes was maintained notwithstanding objections from potential tenderers that "[t]he experienced Stevedores and Handling Agents at Kolkata and Haldia have not had the privilege of Quay Cranes …, but they too have substantial experience in handling and movement of such cargoes," and that the Tender therefore "restricts potential bidder like us (having vast experience in handling of cargo at Ports)." KoPT insisted that the specified essential cargo handling experience "shall remain as is."⁸⁹

113.

The Tender allowed qualified bidders to participate either as a single entity or in a consortium, and stated that in the latter circumstance, the term "Tenderer" for purposes of the Tender provisions would apply to such a consortium.⁹⁰ For a tender submitted by a consortium, one member must be authorized as the "Lead Member," who "shall hold at least 26% of the paid up Equity Share Capital of the Joint Venture Company to be formed by the members of the Consortium," and shall not reduce its shareholding below 26% during the contract term.⁹¹ The members of such a consortium were required to enter into a "Joint Bidding Agreement" (to be submitted with the tender) that would outline "the proposed roles and responsibilities of each member at each stage," and should "convey the intent to form a Joint Venture Company" if selected as the successful tenderer, for the purpose of entering into a contract with KoPT.⁹² A "[c]hange in the composition of a Consortium may be permitted during the bidding stage by KoPT only" subject to certain conditions, with "[a]pproval … at the sole discretion of KoPT" and required to be in writing, and "[t]he modified Consortium would be required to submit a revised Joint Bidding Agreement …."⁹³ The successful tenderer was expressly forbidden from assigning the contract without KoPT's approval,⁹⁴ and "any change in control / ownership of the successful tenderer arising from the sale, assignment, transfer without prior permission of KoPT" would constitute an event of default.⁹⁵

114.

The Tender provided that following its completion, KoPT would issue a Letter of Intent ("LoI") to the successful tenderer. The tenderer would have 30 days to accept the LoI and post a performance guarantee, at which time – and pending execution of a formal contract – KoPT and the successful tenderer would be "construed" as having an agreement for "fulfilling the scope of work and obligation" of the contract.⁹⁶ Within 15 days of "the placement of [the] LoI," KoPT was to provide a "proforma for Agreement … which will basically contain the provisions as detailed in the Tender Document" together with the rate schedule of the successful tender, and the Agreement itself was to be signed within 45 days from "the date of placement of LoI."⁹⁷ The contract would commence from "the date of placement of LoI" and would remain in force for ten years.⁹⁸ The successful tenderer was required to "complete, supply, installation and commissioning of all the equipment" within 180 days of the LoI,⁹⁹ which would be reflected by KoPT's issuance of a Commissioning Certificate, and certain liquidated damages would apply for late commissioning of Mobile Harbor Cranes in particular. For late commissioning of other equipment, KoPT "shall be at liberty to hire the required minimum number" of such equipment from elsewhere and to recover its costs and expenses from the successful tenderer.¹⁰⁰

115.

The Tender provided that the contract would be governed by "the prevailing laws of the Republic of India,"¹⁰¹ and that any contractual dispute that could not be resolved by amicable settlement would be submitted to binding arbitration in Kolkata under India's Arbitration and Conciliation Act, 1996.¹⁰²

116.

On 25 February 2008, a consortium consisting of ABG Infra and its subsidiary, ABG Kolkata Container Terminals Private Limited ("ABG Kolkata") (together, the "ABG Consortium") submitted a bid for the Project.¹⁰³ LDA was heavily involved behind the scenes in preparation of the ABG Consortium's bid, based on discussions with ABG Infra which envisioned LDA's likely collaboration in the event the bid was successful.¹⁰⁴ However, the bid itself did not refer to LDA's potential future involvement.

117.

Prior to the ABG Consortium's submission of its bid, LDA did limited due diligence of its own with respect to conditions on the ground at HDC. It did not send an LDA representative to participate in the formal site inspection KoPT offered all prospective tenderers on 3 December 2007.¹⁰⁵ Instead, LDA's representative made an unofficial visit to HDC in February 2008 with an ABG representative,¹⁰⁶ during which they drove around the site but did not engage with anyone from KoPT, except for a casual conversation with one unnamed KoPT employee in the course of returning a borrowed access pass.¹⁰⁷ LDA also referenced a 2007 port development plan prepared by the Port of Rotterdam Authority for the Indian Ports Association.¹⁰⁸ Otherwise, with respect to local conditions, LDA relied heavily on ABG Infra, its intended partner, which had experience with other types of cargo operations at the port of Kolkata, also administered by KoPT.¹⁰⁹ Based on the information gathered, LDA considered HDC's current methods to be "rather primitive and highly inefficient …, decades behind current maritime practices" and involving an "unnecessarily large" workforce.¹¹⁰

118.

Nonetheless, LDA appears to have based its bid calculations on the assumption that manpower needs for the new mechanized Project at the Berths could be based on more modern levels, even comparable to those at the highly efficient port of Rotterdam.¹¹¹ LDA projected a workforce of approximately 300 employees (excluding management and administrative personnel), based on a "scientific[]" calculation of the required equipment, the number of shifts, and a buffer to cover for employee leave and other absences.¹¹² ABG Infra in turn deferred to LDA's experience with modern mechanized operations.¹¹³ This figure of roughly 300 employees was "an essential aspect of factoring the cost of … operations" for purposes of the bid that the ABG Consortium submitted on 25 February 2008.¹¹⁴

119.

On 16 April 2008, KoPT informed the ABG Consortium that its price bid was the lowest of the various bidders that had previously survived a preliminary stage evaluating "techno commercial" qualifications.¹¹⁵ In fact, the ABG Consortium's price bid was significantly lower than all other bids.¹¹⁶ LDA and ABG Infra explain that they believed the low margins inherent in their bid would be offset by high volumes of dry bulk cargo,¹¹⁷ based on (a) historical and forecasted tonnage for HDC,¹¹⁸ (b) extrapolations from the Tender's MLP requirement,¹¹⁹ and (c) KoPT's "Clarification" during the Tender process about its "own policy … for maximizing cargo" at the newly modernized Berths, which was incorporated into the final Contract.¹²⁰

120.

As noted above, the Tender provided that KoPT would issue a LoI to the successful tenderer, which upon acceptance would be "construed" as having an agreement in effect, even pending the execution of the formal contract documents.¹²¹ However, while KoPT identified the ABG Consortium as the lowest bidder on16 April 2008, it did not issue the LoI to the Consortium until a year later, 29 April 2009.¹²² The Parties disagree as to whether this constitutes a "delay" in issuance of the LoI.¹²³

121.

Even prior to KoPT's issuance of the LoI, the ABG companies and LDA had begun to lay the groundwork for a broad collaboration on cargo handling projects in India, not specifically limited to the HDC Project. On 18 November 2008, ABG Ports incorporated ALBA (then known as ABG Bulk Handling Private Limited) as a new subsidiary.¹²⁴ A month later, on 16 December 2008, ALBA filed a Foreign Collaboration Application with India's Foreign Investment Promotion Board ("FIPB"), a section of the Ministry of Finance, seeking permission to issue 49% of ALBA's equity share capital to LDA.¹²⁵ The FIPB application referenced ALBA's intention to "bid in projects involving handling of bulk cargo at various ports."¹²⁶ On 16 March 2009, the FIPB approved the collaboration between LDA and ALBA, subject to certain terms and conditions.¹²⁷ The approval reflected the FIPB's understanding that ALBA would act as an "operating-cum-holding company" to "[e]ngage in the business of bulk cargo handling at various ports in India," under the administrative supervision of the MoS.¹²⁸

122.

With respect to the Project at HDC, the LoI that KoPT issued to the ABG Consortium on 29 April 2009 reiterated the Tender requirement that the ABG Consortium form a joint venture company to sign a contract with KoPT and fulfill the relevant work.¹²⁹ The next day, 30 April 2009, LDA recognized internally that there was a delicate issue: the contract with KoPT could not be assigned to ALBA, but LDA was not keen to serve as a subcontractor to the ABG companies, rather than as a part-owner of Project rights.¹³⁰ On 1 May 2009, LDA noted that the concern was to find a way to accomplish its objective of partial ownership, without "open[ing] a way for each authority to re-examine the case which would considerably delay the deal." This meant that the links among the various companies would "need to be very carefully worded."¹³¹

123.

On 22 May 2009, ABG Infra and ABG Kolkata incorporated HBT as the joint venture vehicle to contract with KoPT.¹³² The ABG Consortium provided HBT's Memorandum and Articles of Association to KoPT immediately following HBT's incorporation in May 2009, including a chart dated 12 May 2009 that showed ABG Infra and ABG Kolkata as HBT's only shareholders.¹³³

124.

On 16 June 2009, LDA's counsel alerted LDA of a debate with ABG Infra regarding whether, for purposes of the Tender's reference to "any change in control / ownership of the successful tenderer … without prior permission of KoPT" as an event of default,¹³⁴ "the reference to 'successful tenderer' is meant to be a reference to ABG Infralogistics (as the 'Lead Member' of the Consortium) or to the Consortium (i.e., the company which ABG Infralogistics and ABG Container Kolkata Terminal are the shareholders)."¹³⁵ LDA's counsel noted the risk that "if the Port authority disagrees in the future" with ABG Infra's interpretation –that only a change in its control required KoPT's permission, not a change in control or ownership of the proposed joint venture company – "the risk that it will terminate the LOI/license … cannot be excluded." LDA and ABG Infra agreed to address this risk by ensuring that ABG Infra's shareholding of the joint venture would be 51 percent, so "in theory [it] will continue to have control over the Haldia Joint Venture, and in this respect it can be argued that at least the spirit of Clause 7.11(f) … has not been breached." The plan discussed was to have ABG Infra disclose to KoPT "the proposed new composition of the Consortium," including LDA's "minority participation" in the joint venture, but not to ask expressly for KoPT's consent. LDA's counsel believed ABG Infra did not intend to disclose that despite the proposed 51%-49% shareholding structure, the joint venture "will not be effectively controlled by ABG Infralogistics … but will be a 'dead-lock' company wherein both shareholders must always be in agreement or the company will be dissolved."¹³⁶

125.

Ultimately, the joint venture was structured essentially in this fashion. The constituent steps were as follows. First, on 21 July 2009, ABG Ports, ALBA and LDA executed a Shareholders Agreement,¹³⁷ under which LDA and ABG Ports would be allotted newly issued equity shares in ALBA. Two days later, on 23 July 2009, HBT issued equity shares to ALBA,¹³⁸ as a result of which ALBA acquired a 63% shareholding in HBT.¹³⁹ Because HBT also issued preference shares to ALBA,¹⁴⁰ ALBA effectively became entitled to 98.78% of HBT's profits.¹⁴¹ On 24 July 2009, LDA acquired a 49% shareholding in ALBA, remitting Rs. 900 million to it as a foreign investment,¹⁴² with ABG Ports retaining the other 51% of ALBA's shares. However, "both parties retain[ed] joint and equal control over the management of ALBA," because its Articles of Association ensured that "no shareholders resolution can be passed without the assent of both the shareholders" and both would appoint an equal number of directors to ALBA's Board.¹⁴³

126.

LDA illustrates the resulting ownership structure of these companies as follows:¹⁴⁴

127.

On 24 July 2009, the day the transaction closed, ABG Infra announced the deal to the corporate press. One article published on that date announced that LDA had bought a 49% stake in ABG Infra's bulk cargo handling assets, which had been organized into a separate joint venture company, ALBA. The article referenced the approval previously granted by the FIPB.¹⁴⁵ On 4 August 2009, ABG and LDA issued a joint statement about ALBA to "the Press in Kolkata," referring to its plan to provide port services throughout India. The document stated that "[c]urrently ABG is handling Bulk Cargo at three ports" including HDC, and referenced an ALBA proposal for a new project at HDC involving the use of barges.¹⁴⁶

128.

Meanwhile, on 3 August 2009, LDA sent ABG Infra a PowerPoint presentation for use in a planned August 2009 meeting with the Deputy Chairman of the KoPT. The presentation referenced the new "ABG– LDA JV" intended "[t]o build on the synergies of ABG & LDA" for various projects, including

"[s]tarting Mid October 2009" at Berth Nos. 2 and 8 of HDC.¹⁴⁷ The Parties dispute whether this presentation was ever provided to KoPT.¹⁴⁸

129.

In early September 2009, KoPT requested certain revisions to the "Object Clause" of HBT's Memorandum and Articles of Association, which were made.¹⁴⁹ When HBT provided the revised document to KoPT, however, it still included the 12 May 2009 list of HBT shareholders, without any update to identify the subsequent introduction of ALBA as HBT's new majority shareholder. This version of the Memorandum and Articles of Association was the one included in the Contract signed in October 2009.¹⁵⁰

130.

As noted above, the Tender had provided that within 15 days of "the placement of LoI," KoPT was to provide a "proforma for Agreement," and the Agreement itself was to be signed within 45 days from "the date of placement of LoI."¹⁵¹ The LoI in this case was issued and accepted on 29 April 2009.¹⁵² LDA contends that KoPT did not issue the pro forma agreement until 9 October 2009, a "148-day delay."¹⁵³ The Parties disagree as to what caused this delay, with India contending that it was attributable to issues with the Consortium's bank guarantee and the need to revise HBT's founding documents,¹⁵⁴ and LDA disputing this account.¹⁵⁵ The Tribunal does not consider the resolution of this particular factual dispute necessary to its decision.

131.

On 16 October 2009, KoPT and HBT entered into the Contract.¹⁵⁶ The Contract incorporated the full text of the Tender, including the provisions quoted in Section VI.A above, as well as various amendments (Appendix 1), additional clauses (Appendix 2), and the "Clarifications to queries made" during the Tender process (Appendix 3).¹⁵⁷ As to the latter, the Contract stated that "[t]he clarifications given in this Appendix against the different clauses of the Tender Document will however not change the clauses concerned which will continue to remain in the form given in the Tender Document."¹⁵⁸ The Contract also included the bid submitted by the ABG Consortium, various correspondence relating to that bid, and a copy of HBT's Memorandum and Articles of Association.¹⁵⁹

132.

As noted above, the Contract (incorporating the terms of the Tender) required HBT to "complete, supply, installation and commissioning of all the equipment" within 180 days of the LoI,¹⁶⁰ which would be reflected by KoPT's issuance of a Commissioning Certificate. However, while the LoI was in place on 29 April 2009, the Commissioning Certificate was not issued until 4 August 2010, due to a series of intervening events.¹⁶¹ These may be divided conceptually into several categories, although to some extent they occurred concurrently rather than sequentially. First, there were recurring incidents of labor unrest, which resulted inter alia in certain obstacles to the delivery of contractually required equipment and in demands that HBT hire more workers than originally envisioned in its business plans. Second, there were renewed questions about HBT's ownership structure. Third, and connected to the prior issues, there was a dispute over the issuance of the Commissioning Certificate, which ultimately resulted in intervention by a domestic court. These categories of events are summarized separately below.

133.

It is undisputed that the Project faced recurring incidents of labor unrest, associated with concerns about worker displacement resulting from the substitution of mechanization for the previous, labor-intensive stevedoring approach to cargo handling, and by the award of the Tender for this mechanization Project to the ABG Consortium and the subsequent signing of a Contract with HBT. The Parties do not dispute that workers in the Haldia area were organized into several powerful unions affiliated with various political parties. LDA describes the main unions as the INTTUC, affiliated with the TMC party and represented by Mr. Suvendu Adhikari, a union leader who also held a seat in Parliament, and the Centre of Indian Trade Unions ("CITU"), affiliated with the Communist Party of India (Marxist) ("CPI") and led by Mr. Lakshman Seth.¹⁶²

134.

It is undisputed that HDC ultimately faced broad employment demands by both these unions, as well as labor protests by workers associated with one or both. LDA contends that the labor protests were "orchestrated" not simply by the unions seeking full employment for their workers, but also by or on behalf of Ripley, the stevedoring company that previously managed cargo handling at the Berths and whose competing bid for the Tender had been unsuccessful.¹⁶³ LDA contends that Ripley's owner, known as "Tutu Bose," expressly set out to ensure that "ABG Infralogistics would not be allowed to work in Haldia,"¹⁶⁴ and that he did so both "by orchestrating labour unrest [and] violence" and by using his "considerable influence" with KoPT and Government officials to deny HBT in other ways the benefits of the Contract.¹⁶⁵ LDA's position is that resistance to mechanization by displaced operators and workers was "not unusual and w[as] to be expected," but HBT was entitled to expect greater support from KoPT and "other State bodies."¹⁶⁶ India acknowledges the labor unrest but denies that it was supported either by State bodies or by KoPT (which India also disputes constitutes such a State body).

135.

In any event, the Parties agree that the labor concerns manifested very early. On 16 April 2009, shortly before KoPT issued the LoI to the ABG Consortium, representatives of the Haldia Dock Bachao Committee ("HDBC"), a group describing itself as including inter alia "representative[s] of National Trade Unions and the employees of Haldia Dock,"¹⁶⁷ filed a Writ Petition in the Calcutta High Court challenging the award of the Tender to the ABG Consortium. Among the concerns HDBC articulated in the Writ was that the Tender required use of Mobile Harbor Cranes rather than prevailing cargo handling modes, which was said to reflect KoPT favoritism towards ABG Infra that was not in the broader benefit of the HDC as a whole.¹⁶⁸ While this petition did not in the end prevent KoPT from proceeding with the Contract, it did reflect early opposition to the Project. As discussed below, even before commissioning and the start of operations, this opposition from unions and workers resulted in significant delays to HBT's delivery of equipment to HDC, and significant demands placed on HDC for wider employment than it originally had planned.

136.

Pursuant to the Contract, HBT was to have procured certain specialized cargo-handling equipment for the Project,¹⁶⁹ prior to issuance of the Commissioning Certificate and commencement of operations, which were to occur within 180 days of issuance of the LoI (i.e., late October 2009). During October 2009, KoPT inquired about the status, noting that the six Mobile Harbor Cranes had arrived onsite but other equipment remained outstanding.¹⁷⁰ HBT explained that the delivery of pay loaders and bulldozers had been delayed because the vessel delivering them was unable to enter the Haldia Port, due to a low draft in an access river, which HBT characterized as force majeure.¹⁷¹

137.

By the end of October, HBT reported that "[a]ll of our heavy equipment is there (cranes, wheel loaders, dozers)," and the weighbridges were "ready but because of late in granting the license for installation there will be some delay." However, the dumper trucks, also referred to as tippers, had been "stopped at the main gate of HDC port by port workers and obliged to park outside." HBT stated that "[h]ostility manifested by some categories of port workers is not in our control," but estimated that cargo operations could start around 11 November 2009.¹⁷² On 9 November 2009, KoPT denied that "port workers" were responsible for delays in delivery of the dumpers, and protested continued delays in commissioning of equipment.¹⁷³

138.

On 9 December 2009, HBT reported to KoPT that two further attempts at delivery of the dumpers had failed. According to HBT, on 3 December 2009 the "local union" had blocked 25 dumpers at the main gate and "threaten[ed] the drivers who in turn refused to proceed to port."¹⁷⁴ When delivery of twelve dumpers was attempted on 9 December 2009, members of the "local union" again stopped them at the gate, and confiscated the keys of two of the dumpers, with the other ten moved to a yard arranged by ABG. HBT reported to KoPT that that a "Haldia port security officer" had made a record of the incident.¹⁷⁵ On 22 December 2009, HBT informed KoPT that we "are still unable to get entry for the Dumpers inside the Haldia Dock Complex," which constituted a force majeure event.¹⁷⁶ On 24 December 2009, KoPT rejected HBT's invocation of force majeure for the alleged "obstruction outside the premises" of HDC, and requested copies of any police reports (known as First Information Reports, or "FIRs") that HBT had filed "in support of [its] contention," along with any communications to the District Administration requesting "required escort / support / cooperation in enabling you to move your dumpers inside the [HDC] premises."¹⁷⁷ To this point, HBT apparently had not filed any FIRs with the police, but on 29 December 2009 it did so, complaining about obstructions to entry of its dumpers into HDC and requesting that the police "take action to enable us to take the Dumpers inside the Dock Complex."¹⁷⁸

139.

On 2 January 2010, HBT claimed to KoPT that it had "completed the supply, installation and commissioning of all the equipment under the provisions of the contract." The letter noted that one road weighbridge was "expected shortly," and that regarding the 50 dumpers, 37 had been blocked for some time outside the gates, and the remaining 13 would be brought into Haldia only after there was a "resolution to the current impasse on account of labour unrest by blockage/gherao."¹⁷⁹ KoPT forwarded this letter the same day to the District Magistrate, copying the local police, and explained that because "it is in the interest of all concerned to ensure that the [Contract with HBT] commences at the earliest," the authorities were requested to "look into the matter and pass necessary instructions" to enable HBT to bring its dumpers into HDC "without any problem."¹⁸⁰ KoPT also apparently raised the issue with the MoS on 4 January 2010, and on 5 January 2010 KoPT wrote again to the District Magistrate, this time copying the Home Department of the Government of West Bengal, and stated that "the Ministry have taken a very serious note of the above issue and have advised us to take up the matter with the District Administration …."¹⁸¹ On 7 January 2010, HBT also wrote directly to the District Magistrate, referring to the same 3 December and 9 December 2009 incidents and requesting assistance, because "[a]s a result of the blockade by the labour union … [HBT] is unable to fulfill its contractual obligations as required by the tender…."¹⁸²

140.

On 12 January 2010, HBT wrote to the police, requesting "support & necessary protection today" to bring 37 dumpers inside the gates. HBT reported that "[a]t present a group of people have blocked & camped outside the entrance" to the yard where the dumpers were parked, demanding employment by HBT, and "[w]e expect obstruction from them as well as from Union people at the entrance of Haldia port gate."¹⁸³ In response, the police accompanied HBT officers to the yard, but the dumper drivers were delayed in joining them; HBT later reported that by the time the drivers eventually reached the site, the escort police had left, and the drivers were unable to bring the dumpers out of the yard as the exit gate was blocked by "a group of about one hundred people armed with piece of wood."¹⁸⁴ The police opened an investigation in response to HBT's report.¹⁸⁵

141.

On 23 January 2010, HBT again invoked force majeure in a letter to KoPT, citing as among the reasons it had not yet fulfilled all Contract requirements its inability to bring the dumpers into HDC, despite three separate efforts on 3 December 2009, 9 December 2009 and 12 January 2010.¹⁸⁶

142.

On 8 February 2010, the Additional District Magistrate met with HBT to discuss various issues, including the obstacles to delivery of the dumpers.¹⁸⁷ The Additional District Manager indicated that he would "discuss with the leader of obstructing group to find a solution."¹⁸⁸

143.

On 16 February 2010, HBT asked KoPT to begin allotting vessels for unloading at the Berths, explaining that its Mobile Harbor Cranes were "ready for operation" and while its dumpers remained blocked, KoPT could hire substitute dumpers and recover the costs from HBT.¹⁸⁹ On 5 March 2010, however, KoPT insisted that HBT had not fulfilled its contractual obligations regarding the supply of equipment, and was "still not ready to undertake cargo handling operations... in the manner provided in the tender document concerned."¹⁹⁰

144.

On 25 March 2010, HBT informed KoPT and the local police of its plan to try again that day to move the 37 dumpers inside HDC. On 26 March 2010, it reported to the police (through an FIR) that upon arrival at the yard, it found that some of the engines had been tampered with. HBT requested that the police provide adequate protection to move the dumpers to a repair yard.¹⁹¹ The police opened an investigation into this report.¹⁹² On 31 March 2010, HBT informed the police that it would again attempt to move the dumpers on 1 April 2010, but on 7 April 2010 it reported to the District Magistrate that no police were present at the yard, and a group of 25 people obstructed movement of the dumpers and warned HBT employees not to persist.¹⁹³ The police opened an investigation,¹⁹⁴ which reportedly led to charges against eight individuals who were granted bail; India's evidence is that "presently the case is sub-judice before the Court and the trial is pending."¹⁹⁵

145.

On 12 April 2010, HBT filed a Writ Petition in the Calcutta High Court, seeking the assistance of the local authorities in moving its dumpers into HDC.¹⁹⁶ In an order dated 21 April 2010, the Calcutta High Court ordered the police to assist HBT in moving the dumpers.¹⁹⁷ The Court stated that "[t]his is the third instance in the recent past where a company caring [sic] on business at Haldia had to approach the Court of Writ for obtaining orders for ensuring normal functioning of its business. In the earlier two cases, it has been reported that after orders were passed by this Court, the same were complied with and normalcy was restored. It is incomprehensible as to why the administration would force the aggrieved company … to approach the Court …. to obtain orders … to remedy" the grievance.¹⁹⁸

146.

Over two nights between 28 April 2010 and 1 May 2010, HBT moved many of its dumpers into HDC under police protection, although not without incident. HBT reported that the first night, stones were thrown at the dumpers and the police had to intervene to clear the area, making a number of arrests.¹⁹⁹ On 29 April 2010, the police opened an investigation into this attack.²⁰⁰ HBT thereafter completed the delivery of the remaining dumpers.²⁰¹

147.

The obstruction of the dumpers was simply one manifestation of a bigger issue of labor unrest, another of which was recurring demands for wider employment by workers associated with various unions.

148.

With respect to the labor issues, the record indicates that LDA was aware of pressure early on. On 9 December 2009, LDA was sent a press article suggesting public perception that it intended to contract for workers with "private contractors" paying "much less than the stipulated minimum wages," which current workers would oppose. LDA responded internally that this was not its current plan: "Agreement with Labour Contractors will not be finalized because of political problems, we will take all workers on our payroll copying the salary given by Five Star currently Labour Contractor using workers from the main Labour Union of the port (CPI Communist Party of India)."²⁰²

149.

On 27 December 2009, HBT posted a notice for recruitment of all categories of workers, and received "adequate application[s]" in the days that followed, except for insufficient numbers of dumper and bulldozer operators.²⁰³ Then, on 1 January 2010, HBT met with the head of the CITU union, who requested that HBT hire at least 400 CITU workers who had previously been employed by Ripley for shore handling tasks on Berth Nos. 2 and 8, along with 300 workers from the "Cargo pool," which traditionally handled shipside operations.²⁰⁴ It appears HBT did not initially agree to this demand, although it stated in a letter to a different union (affiliated with INTTUC) that existing laborers from both Berths were "welcome to apply to us."²⁰⁵ However, when HBT posted a second recruiting announcement on 7 January 2010, it received "no application … from labours working in Berth 2 & 8." Instead, on 11 January 2010, "labour from Berth No 2 & 8 under CITU union banner … made a deputation in front of our office and submitted a request letter for employment [of] all labour of Berth No 2 &8 … on the same wage scale earned."²⁰⁶ The CITU letter explained that its workers had worked for Ripley on the Berths for 20 years, and were "feeling in secured [sic]" now that "tender for both the Berth has gone to ABG." HBT understood the request to re-employ all workers to now be for about 500 people.²⁰⁷

150.

On 16 January 2010, HBT reportedly "replied to them favourably accepting their conditions and submitted a copy of announcement that will be posted inside HDC for them to apply to us." The announcement posted that day invited requests between 18 and 20 January 2010, but again, "no body from Berth 2 & 8 approached us nor submitted their document with us," while outside applicants who had applied between 1 and 22 January 2010 were "continuously [inquiring] regarding their recruitment."²⁰⁸ Accordingly, HBT began issuing appointment letters to short-listed candidates, and announced a further recruitment forum beginning 22 January 2010. However, "some workers belonging to local unions collected outside the Training Institute and started shouting and protesting against the recruitment. They threatened to physically attack us and our employees and …burn down our vehicles and equipment unless we immediately stop the recruitment."²⁰⁹ HBT suspended the recruitment process and requested help from the CISF, who subsequently arrived and escorted HBT employees to safety.²¹⁰

151.

On 23 January 2010, HBT reported to KoPT that in addition to the "blockade" of its dumpers, "we are also facing labour boycott to our recruitment process," even though it had already "agreed to a demand of the local union to recruit all those who were presently working" at the Berths. HBT cited this as an additional force majeure event excusing its compliance with Contract deadlines for obtaining a Commissioning Certificate.²¹¹ On 25 January 2010, HBT added another force majeure claim that at Berth No. 2 (inside HDC), its employees were "threatened by a group of drivers & helpers claiming to be from" Ripley, and its work on the Mobile Harbor Cranes was obstructed by eight dumpers belonging to Ripley.²¹² HBT reported the information to CISF, and "CISF force and commander came on site" within ten minutes of the start of the incident, and HBT together "[w]ith Port officials" were able to "control the situation."²¹³

152.

On 8 February 2010, when HBT met with the Additional District Magistrate to discuss "problems we are facing," it mentioned –in addition to the obstruction to dumpers – the "[o]bstruction in recruitment process," "[e]xorbitant salary demands," and "[t]hreat to our employee & office." HBT reported that to date, the CITU union "has asked us to recruit existing workers abt 540 at a very high wage structure plus 250 labours from cargo pool," but the other union (INTTUC, affiliated with TMC) "has not placed any concrete demands." The Additional District Magistrate indicated that once the District Magistrate returned from leave on 17 February 2010, "he will discuss for a meeting at political level to resolve the issue."²¹⁴

153.

LDA's witness Mr. Malhi (who was at the time HBT's Chief Executive Officer) contends that in February 2010, KoPT's then-Manager of Administration (Mr. A.K. Dutta) told him that "the only way in which HBT would be able to resolve the situation is if I agreed to the labour demands of CITU …"²¹⁵ Mr. A.K. Dutta denies ever telling Mr. Malhi that HBT had to accept the union demands.²¹⁶ In any event, it is clear that HBT and CITU had a number of direct negotiations during February and March 2010.²¹⁷ In the end, on24 March 2010, HBT and CITU signed a Settlement Agreement providing that HBT "will employ not more than 450 employees who are presently working" at the Berths, on a defined wage scale, with the agreement to become effective only after HBT's dumpers had entered into HDC. All union employees who wished to work at HBT were to report promptly to its office to show documentation of their prior employment and qualifications and to collect a "Joining letter."²¹⁸

154.

The agreement with CITU was not, however, the end of HBT's labor problems. On 25 June 2010, Mr. Adhikari –a Member of Parliament and the representative of INTTUC, the TMC-affiliated union – held a rally at the HDC gates. According to a summary prepared by HBT, his remarks seemed designed to "encourage[] existing members of CITU to leave & join" INTTUC instead. Among other things, the speech accused CITU and the local police of helping HBT bring its dumpers into the HDC. Mr. Adhikari reportedly stated that although the equipment had now arrived, it (and HBT more generally) "will never operate …."²¹⁹

155.

As of early August 2010, HBT had hired 122 workers directly, and issued "Joining letter[s]" to 203 workers affiliated with CITU. On 2 August 2010, a representative of INTTUC approached HBT and stated that its members had been "instructed by their leader for peaceful deputation in front" of the office. HBT noted that "INTTUC union is the opposition group of CITU in the port," and it was now demanding "recruitment of would be retrenched Ripley workers, also the associated small group of workers under various agencies."²²⁰ Two days later –on4 August 2010, the same day KoPT finally issued the Commissioning Certificate²²¹ –the local INTTUC affiliate demanded in writing that HBT employ all prior workers at the Berths, which it stated to be "presently about 1,260 ([Ripley]) & 974 (Cargo Pool) workers."²²² As discussed below in regards to the post-commissioning time period, this would not be the final demand INTTUC presented for hiring of additional workers.

156.

Meanwhile, the issue of HBT's change in ownership structure, from an ABG Consortium-owned company to one majority-owned by ALBA, began to attract attention and generate dispute.

157.

As noted above, the HBT Memorandum and Articles of Association incorporated into the Contract signed in October 2009 did not reflect the changes in HBT's ownership that had been effected in July 2009. On 3 February 2010, KoPT requested HBT to clarify the composition of its shareholding.²²³ The letter reminded HBT of Section 2.7(b) of the Tender, requiring the minimum shareholding of the lead member of the Consortium, and of Section 7.11(f) of the Contract, concerning an event of default from any unauthorized "change in control / ownership of the successful tenderer." KoPT's letter described HBT as the "successful tenderer" for purposes of the latter provision, and asked it "to indicate … to what extent each of the constituent members of [HBT] holds the paid up Equity Share Capital … and … the extent of shareholding …by others who were not the members of the consortium."²²⁴

158.

On 8 February 2010, LDA noted internally that "[w]e don't have to be too worried about the [Section 2.7(b) inquiry]," because ABG Infra still held the required 26%of shares and "[c]onsequently, we are still fully compliant …." However, LDA recalled its June 2009 debate with ABG Infra regarding which entity could be considered the "successful tenderer," and whether disclosure should be made to KoPT regarding ALBA's purchasing a 63% stake in HBT. LDA wondered internally whether ABG Infra did "finally decide to inform the Port" and whether there was "any letter sent" to KoPT in that regard. It took the position that, in any event, "there is no change of control/ownership," because even if the tenderer was deemed to be HBT rather than ABG Infra, ABG Infra still ultimately controlled HBT through a combination of its direct stake (26% of HBT's shares), and its indirect stake (by owning 51% of both ALBA and ABG Kolkata, which in turn owned 63% and 11%of HBT, respectively).²²⁵

159.

Following this internal consultation, HBT responded to KoPT's inquiry on 12 February 2010, clarifying that HBT was not itself the "successful tenderer," but rather was the "joint venture company incorporated by the 'successful tenderer' viz ABG Infralogistics …." HBT referred back to the LoI, which was addressed to ABG Infra as lead member of the Consortium, and observed that HBT itself was "not in existence on the date the Tender Document was submitted or on the date of issuance of the LoI." HBT confirmed that "[t]here is no change in control/ ownership of ABG Infra," and "[i]n so far as [HBT] is concerned, we state that the same continues to be controlled by ABG Infra …." It explained that while HBT had issued "fresh capital" in accordance with its Memorandum and Articles of Association, resulting in ABG Infra's direct stake being reduced from 89%to 26% and ALBA obtaining a 63% shareholding, "both ABG Kolkata and [ALBA] are subsidiaries of ABG Infra."²²⁶ As India points out in this case,²²⁷ this assertion about ALBA being an ABG Infra "subsidiary" may have been technically accurate by virtue of ABG Infra's 51% shareholding, but did not reflect LDA's effective joint control by virtue of having an equal number of Board members as ABG Infra.²²⁸

160.

On 15 March 2010, KoPT's Manager of Finance issued a report about the change in the shareholding pattern of HBT and recommended seeking an opinion from a legal advisor.²²⁹ KoPT thereafter referred HBT's 23 February 2010 letter, along with other information, to the Additional Solicitor General of India, and asked (among other things) whether ABG Infra was in breach of Section 7.11(f) of the Contract as a result of the change in shareholding in HBT.²³⁰ On 12 May 2010, the Additional Solicitor General opined that "[t]he 'change in control/ownership' … contemplated as an event of default is '… of the successful tenderer' and therefore at least not expressly of" the special purpose vehicle to be established upon award of the Tender.²³¹ However, he continued:

To me, it appears, change in the shareholding of the SPV is also contemplated as being governed by Clause 7.11(f), in view of the fact that the execution of the tender has to be done by the instrumentality of the SPV.

To conclude, therefore, the express language of Clause 7.11(f) does include a change in control/ownership of the SPV but merely of the successful tenderer, i.e., the ABG Group Group. But in my view, on a meaningful reading of Clause 7.11(f), it can reasonably be contended that a change in control or ownership of the instrumentality by which the successful tenderer is to execute the project would also be covered by the said Clause as an event of default. The query is answered accordingly.²³²

161.

Also on 21 May 2010, Ripley wrote to KoPT, raising numerous objections regarding HBT's performance of its obligations under the Tender and the Contract. Among these objections were that "[t]he ABG Consortium has entered into the contract in gross violation of the Tender Documents."²³³ Among other things, in Ripley's view, under the Tender rules "[c]hange in the composition of a consortium was permitted only during the bidding stage and that too at the sole discretion of KOPT. … The Joint Venture Company for implementing the Project would be formed only after completion of the bidding stage. Hence, the Joint Venture Company could comprise only of the consortium members as its shareholders."²³⁴ However, Ripley stated, "[w]e have obtained particulars from Office of the Registrar of Companies which will clearly show that ABG has violated express and specific conditions of the Tender Documents relating to change in the composition of the consortium and control / ownership of the entity awarded the contract."²³⁵ Ripley identified the introduction of ALBA into HBT's ownership and LDA's role in ALBA, and accused the ABG Consortium of "surreptitiously and by subterfuge induct[ing] two additional members into the Consortium after completion of the bidding stage and prior to signing the agreement with KoPT. … If no approval was obtained, such induction … is highly unethical and illegal in terms of the tender documents."²³⁶ Ripley also noted the issuance of preference shares to LDA, which it described as "a way of assigning the contract to a party who was not a member of the Consortium at all."²³⁷ Ripley urged that "KoPT being a government authority should neither encourage nor accept such practice and on the contrary take stern action against such fraud."²³⁸

162.

On 17 June 2010, KoPT requested a second opinion from the Additional Solicitor General, asking whether the change in shareholding "may be treated as fraudulent representation by ABG and on this ground whether the contract is liable to be considered for termination."²³⁹ He noted that neither ABG Infra nor HBT brought to KoPT's attention the introduction of ALBA as a third shareholder in HBT, and that when ABG Infra was forced to admit to the change in response to KoPT's specific inquiry, "[i]t was also mentioned that the new shareholder was a 'sister concern.'"²⁴⁰ The Additional Solicitor General considered that the failure to disclose the change in shareholding did "amount[] to a conduct of misrepresentation," but ultimately concluded that it was not necessarily a "fraudulent misrepresentation": "[t]he answer to this would depend in part on whether the new shareholder is in fact a 'sister concern' of the existing shareholders/the original tenderer, and also on whether as a result of this induction any detriment was caused to" KoPT, "neither of which is a conclusion completely free from doubt."²⁴¹ He added that KoPT might also wish to consider whether it was in its "commercial best interests" to terminate the Contract, even if it had grounds to do so.²⁴²

163.

While all of these issues were pending, the question arose whether KoPT should proceed to issue HBT with a Commissioning Certificate (as it repeatedly requested), or whether it should refuse to do so on various grounds.

164.

As noted above, on 2 January 2010 HBT had claimed it had "completed the supply, installation and commissioning" of all required equipment, except the dumpers obstructed by local unions and a single road weighbridge.²⁴³ On 23 January 2010, HBT asked KoPT to now issue a Commissioning Certificate. HBT acknowledged that it had not fulfilled all the Tender requirements, but sought an extension to do so in light of the continuing obstruction of the dumpers and its recruiting efforts, which it contended were force majeure events.²⁴⁴

165.

On 25 January 2010, KoPT issued a "Show Cause Notice" requiring HBT to demonstrate why the Contract should not be terminated for default. KoPT recalled that under the Tender, equipment was to be ready for commissioning within 180 days of the LoI, which was 25 October 2009, and that delays exceeding 90 days (i.e., after 23 January 2010) would be grounds for termination. KoPT noted that in addition to delay installing dumpers and weighbridges, HBT had not provided necessary details regarding deployment of manpower, all of which were defaults "for which they are entirely responsible."²⁴⁵ HBT responded in detail on 9 February 2010, explaining why it should not be considered in default of its obligations, and stating that KoPT, "rather than facilitating the smooth implementation of the project... has been delaying, hindering and coming in the way of smooth implementation …." HBT contended that "but for the complete failure in maintaining the law and order situation within the Port, the operations would have commenced by now …"²⁴⁶

166.

On 12 February 2010, in the context of responding to KoPT's inquiry regarding HBT's current shareholders, HBT reiterated that it "[wa]s ready to commence operations of the different cargo handling equipment" at the Berths.²⁴⁷ On 16 February 2010, HBT requested KoPT to allot vessels to the Berths, since its Mobile Harbor Cranes "[we]re ready for operation" and the absence of its dumpers could be overcome by KoPT hiring its own dumpers at HBT's expense.²⁴⁸ On 5 March 2010, KoPT responded that HBT was "still not ready to undertake cargo handling operations … in the manner provided in the tender document …"²⁴⁹

167.

KoPT presented a series of questions about this impasse to India's Additional Solicitor General, in addition to posing the questions discussed above about the change in HBT's shareholding. Among other things, KoPT requested legal advice on whether HBT was in breach of the Contract by not having complied with the Commissioning Schedule, or whether it could appropriately invoke force majeure because of the dumper situation.²⁵⁰ The Additional Solicitor General observed as a practical matter that the dumper situation had now been resolved after obtaining orders of assistance from the Court.²⁵¹ "From a pragmatic commercial viewpoint, the situation which emerges is that there appears to be a default by the ABG Group in meeting the timelines of the tender conditions, but at the same time, the valuable machinery and equipment have been brought in … and there is every likelihood that the same will be commissioned. This installation of equipment and machinery was within the permission and is in the knowledge of [KoPT]."²⁵² The Additional Solicitor General suggested that rather than terminating the Contract which could result in protracted disputes, the KoPT instead could direct prompt performance while demanding liquidated damages for the past delay, which would be "the preferred ideal solution from a commercial viewpoint."²⁵³ He concluded that "in matters of this nature, notwithstanding the fact that the [KoPT] is an instrumentality of the State, it is always advisable to … take steps which are commercially prudent," rather than a "literal approach based on a purely technical and pedantic interpretation of the contract [which] would only result in a protracted litigation which may not be in the best interests of [KoPT]."²⁵⁴

168.

On 17 May 2010, HBT advised that it had now completed commissioning of the outstanding road weighbridges, which meant that it had now commissioned all the required equipment, and had arranged for recruitment of over 300 workmen to carry out the contract. It reiterated its request for the Commissioning Certificate and that KoPT allot vessels so it could commence cargo operations.²⁵⁵

169.

On 29 June 2010, HBT filed a Writ Petition in the Calcutta High Court, seeking the Court's intervention for directions to KoPT to issue the Commissioning Certificate.²⁵⁶ On 2 July 2010, the Calcutta High Court directed the MoS to decide on the issue of the Commissioning Certificate within 7 days.²⁵⁷ With respect to HBT's claim that its delay in commissioning should be excused by force majeure, the Court noted that its case "cannot be brushed aside altogether," given the KoPT's own prior request to the District Magistrate (on 2 January 2010) for assistance to HBT regarding the dumpers, and HBT's prior resort to the Court for an order of police protection. The Court also noted that "public interest is intimately associated with the execution of the works," so the central government should be asked "to examine the whole matter and decide whether it should give a specific direction to [KoPT] to issue the required commissioning certificate."²⁵⁸

170.

On 7 July 2010, Ripley wrote to the MoS, requesting an opportunity to be heard on the issue of the Commissioning Certificate.²⁵⁹

171.

On 20 July 2010, HBT filed a second Writ Petition in the Calcutta High Court, seeking the Court's intervention for directions to KoPT to issue the Commissioning Certificate, in the absence of any decision to date by the MoS. The MoS requested an extension, which the Court granted.²⁶⁰ On 26 July 2010, the MoS held a hearing on the issue, and HBT followed up with a letter to the MoS, confirming its "unconditional acceptance to any/all requirements as may be stipulated by the MoS for the smooth implementation of the Project."²⁶¹

172.

On 28 July 2010, the MoS directed KoPT to issue a Commissioning Certificate to HBT. It concluded inter alia that notwithstanding "inordinate delays" in signing the LoI and the Contract, the mechanization project at the Berths would increase efficiency in operations; the "entire machinery is now within the port premises"; HBT provided assurances that it could start operations immediately; and the State Government of West Bengal considered that the "public interest" should be factored into the decision.²⁶² The MoS also noted "that the issue of induction of a third partner was clarified by [HBT] that it is permissible under … the contract."²⁶³ It concluded that the "ends of justice would be met in this case if KOPT issues the Commissioning Certificate to the successful tenderer … immediately so that they can start the work immediately."²⁶⁴

173.

KoPT issued the Commissioning Certificate on 4 August 2010.²⁶⁵ On 9 September 2010, KoPT began notifying existing end users of the availability of HBT's Berths,²⁶⁶ and on 11-12 September 2010, HBT commenced operations at the Berths.²⁶⁷ On 16 September 2010, KoPT issued a "Circular" about HBT's commencement of operations.²⁶⁸

174.

The difficulties with the Project did not abate with the issuance of the Commissioning Certificate and the start of operations. As summarized below, HBT continued to encounter pressure to hire additional workers, and to experience labor issues that impacted its rate of productivity. Other issues impacted its productivity, including disputes over the adequacy of storage facilities and over responsibility for loading and unloading "railway rakes." KoPT cited the productivity issues as the basis for imposing penalties and liquidated damages, which resulted in recurring disputes about HBT's invoices. HBT requested a reduction in its required productivity level (the MLP) on account of various obstacles, and also requested additional cargo allocation, complaining that the combination of low cargo allocation and excess labor costs was imposing significant losses. These events combined for an unhappy, if nonetheless functional, window of operations.

175.

As discussed above, on 4 August 2010, the very day KoPT issued the Commissioning Certificate, an INTTUC-affiliated union demanded that HBT employ all prior workers at the Berths, which it stated to be "presently about 1,260 ([Ripley]) & 974 (Cargo Pool) workers."²⁶⁹ By this time, HBT already had hired between 325 and 350 workers, including as a result of its March 2010 agreement with the CITU union.²⁷⁰

176.

In its 4 August 2010 letter, the INTTUC union stated that if its demands were met, "we also assure you to extend our co-operation … for smooth handing over of the process of re-employment …." The letter intimated, however, that a failure to comply could have consequences: "We trust, you will not take any decision which leads to labour unrest and jeopardize the whole process."²⁷¹ It appears that HBT met with INTTUC leaders on 28 August 2010, and according to a later INTTUC letter may have provided certain assurances, which INTTUC characterized as "that our union members will be absorbed at an earliest convenient [sic]" on the basis of a list names to be provided by INTTUC.²⁷² On 29 August 2010, the union forwarded an initial list of nine "token name of candidates for immediate employment," "to have a footing/entry directly in your working zone … without disturbing your operational network, planning, progress etc."²⁷³ On 1 September 2010, the union followed up with a list of 713 employees said to have been working under Ripley on Berth Nos. 2 and 8.²⁷⁴

177.

The next day, HBT met with the INTTUC group, in the presence of Mr. Adhikari, who was both the local representative of INTTUC and a Member of Parliament. As reflected in HBT's follow-up letter to the union of 3 September 2010, it explained during the meeting that it already had employed 203 of the former Berth employees, but it also agreed to reinstate "the remaining legitimate employees (about 510) … retrenched by [Ripley] that have the requisite qualifications and experience." HBT sent a copy of its letter not only to Mr. Adhikari but also to the then-Chairman of KoPT, Mr. Meena.²⁷⁵

178.

LDA contends that the reason HBT copied KoPT on this letter was that Mr. Meena had previously intervened to direct it to accommodate the INTTUC demands. According to Mr. Agarwal (the Managing Director of ABG Infra), "in early September 2010" Mr. Meena had told him by phone that Mr. Adhikari would provide HBT with a list of INTTUC workers "who had to be unquestioningly taken on its rolls, regardless of qualification or necessity."²⁷⁶ Mr. Meena denies having done so, stating that "[n]either I nor any of KoPT officer working under my supervision ever instructed or demanded HBT to employ any workers" or that HBT "had to accept employment demands by Mr. Adhikari."²⁷⁷

179.

On 8 September 2010, INTTUC submitted a list of 460 workers, pursuant to what it contended was HBT's prior assurance at the 28 August 2010 meeting "that our union members will be absorbed at an earliest convenient [sic] on the basis of the name list."²⁷⁸

180.

On 9 September 2010, ALBA's Operations Manager reported internally that while "Haldia is about to start finally" and "this will surely [be]a good news for the bankers," there remained significant "[m]anning problems." These were summarized as follows. First, HBT was caught "between two union equally important (CITU and TMS Trinamul Congress) where the workers are playing between the two to get job and salary increment." The result was that "we will have to employ more people than scheduled and we will have to pay them more." In addition, "[t]he cleaning of holds/wagon, wagon trimming and labelling will need about 300 peoples. This job is in Haldia the private garden from Cargo Pool and will fight to keep it."²⁷⁹

181.

On 15 September 2010, the local INTTUC-affiliate submitted a list of 39 further names.²⁸⁰ On 18 September 2010, it wrote to complain that HBT had not indicated how it would handle their recruitment, and warned that if there was no response in two days, "we will go on agitation (Gharao Karma Suchi,²⁸¹ Abasthan), Relay Strike, Hunger Strike beyond [HBT] office and inside the Dock Complex and we will be compelled to ask our union workers to go slow in work" at Berth Nos. 2 and 8. The letter stated that it was "our last Ultimatum."²⁸²

182.

Meanwhile, HBT was also facing separate demands from the Five Star Shipping Agency ("Five Star"), an agency representing a group of workers who provided on-board cargo services (sometimes referred to as the "cargo pool"). LDA alleges that on 11 September 2010, workers from Five Star obstructed HBT's operations and demanded that HBT engage their services; it contends that the KoPT Chairman then "intervened at the scene and prevented the cargo pool from obstructing HBT's operations by removing the cargo pool labourers with the assistance of the CISF."²⁸³ An internal LDA e-mail from 12 September 2010 indicated that the next day, HBT's CEO (Mr. Malhi) left for Haldia "to negotiate and resolve the Cargo Pool issue."²⁸⁴ Accounts of the genesis of the September 2010 meeting with Five Star differ, with ABG Infra's Managing Director Mr. Agarwal contending that the KoPT Chairman (Mr. Meena) told him by phone that "HBT was also to engage the services" of Five Star,²⁸⁵ and Mr. Meena denying that he "[]ever asked –let alone compelled – [HBT] to hire the services" of Five Star,²⁸⁶ or even "invited the attendants to the meeting …, let alone … 'orchestrated' [it], as LDA alleges."²⁸⁷ In any event, it seems clear that both Mr. Meena and the INTTUC representative and Member of Parliament Mr. Adhikari were present at the meeting between HBT and Five Star.²⁸⁸ Mr. Malhi contends that during the meeting, Five Star pushed for a flat monthly fee and HBT insisted instead on a per-tonne fee related to cargo volume, and that Mr. Meena then "assured" Mr. Malhi of certain minimum cargo volumes for HBT (discussed infra) that would bring a per-tonne fee for Five Star close to the monthly fee level it had sought.²⁸⁹ HBT contends that on this basis, it agreed to employ Five Star's services.²⁹⁰ Mr. Meena denies any cargo allocation promises,²⁹¹ and contends that his presence in the meeting was not unusual and in no way constituted a compulsion on HBT to hire Five Star.²⁹² A 14 January 2011 e-mail from Five Star contends that HBT agreed during the meeting to hire Five Star for an initial two-month period with a monthly fee, pending a "permanent agreement based on actual facts & figure," in return for which "Five Star will resolve all labour related issues."²⁹³

183.

By February 2011, HBT's internal profitability analysis reported that it had completed its "Manning" recruitment "after tough negotiations with Labor Unions amid Political Turmoil," and it would be difficult to reduce manning levels before the May 2011 elections, but after the elections, "in confidence with winning party," it would "attempt to reduce manning levels." HBT also reported that it was having to pay for additional "Contracted Labor" which was "[u]nexpected & not a part of the [Business Plan]," but the "[l]ocal labor situation warranted engagement." The specific price terms had not yet been finalized with the cargo pool contractor (Five Star).²⁹⁴ That lack of clarity about the terms of Five Star's engagement continued to generate disputes, with Five Star contending on 24 March 2011 that HBT was withholding full payment due to it and "stopp[ing] operations" as a result.²⁹⁵ HBT's invoice dispute with Five Star continued into 2012, with KoPT taking the position (in response to an HBT letter) that contractually HBT bore the "entire responsibility" for any financial obligations and disputes with respect to any subcontractors.²⁹⁶

184.

As early as August 2011, HBT began considering internally the possibility of retrenching excess workers, indicating to an outside legal advisor that it presently had 628 employees and wished to retrench approximately 100 of them. On 25 August 2011, the legal advisor advised that "labourers can be retrenched either upon one month[']s notice in writing or payment of compensation in lieu of notice," and recommended that "[t]he advisable procedure" was to terminate workers "without prior notice and upon payment of adequate compensation." The legal advisor acknowledged that termination of workers could result in "industrial disputes" which might end up in Labour Court, or in "agitation in the premises" for which HBT could "inform the local police authorities or even file a criminal complaint."²⁹⁷

185.

HBT's period of operations was plagued by other disputes with KoPT. On 13 October 2010, roughly one month after commencing operations, HBT requested a reduction in the MLP rate from 20,000 to 14,000 metric tons ("MT") per ship berth day, invoking certain "factors, which are beyond our control, [which] are adversely affecting our productivity." HBT cited: (a) the arrival condition of vessels, including the fact that some cargo had been offloaded at a prior port due to the "the declining draft in the navigable channel to Haldia" and the remaining cargo was "not spread out evenly" in accordance with "the normal practice of good stevedoring"; (b) "the supporting infrastructure inside HDC [which] is not conducive and is not geared towards achieving" the MLP, including poor roads, lighting, and stockyard area and layout; (c) the lack of railway rakes, requiring HBT to use payloaders over long distances; and (d) poor "[w]ork culture & habits" of the available workforce, whose "mindset has been moulded and hardened to a specific style of working" and who were "vehemently opposed" to change.²⁹⁸

186.

HBT's internal profitability analysis from February 2011, just a few months after beginning operations, confirmed that it was struggling to achieve the MLP, and noted that productivity was "affected by Human factor & [Vessel's] arrival condition." As to the former, HBT reported "[f]requent disruptions by our Unionized labor and contracted labor for higher salary." HBT recognized it would need to "[e]nsure MLP is exceeded on each vessel (easier said than done)."²⁹⁹ Other factors also contributed to HBT's continuing struggle to meet efficiency metrics. On 28May 2011, HBT forwarded KoPT a presentation on "Infrastructure Constraints affecting the productivity of Operations" at Berth Nos. 2 and 8, which complained inter alia about the dimensions and location of its dedicated storage facilities, and stated that "with given infrastructure even though vessel is able to discharge" cargo at the MLP rates, "leftover cargo … will still remain on jetty for evacuation."³⁰⁰ It provided a "[c]alculation for Ideal condition" to evacuate cargo at the MLP rate, although its own calculations under these conditions still showed a small "[b]alance quantity" of cargo that could not be shifted within the 24 hours.³⁰¹

187.

The storage constraints continued to be an issue, with HBT advising on 13 July 2011 that its evacuation of cargo from the jetty following unloading of one vessel had been "severely affected due space constrain[t] in the yard," resulting in HBT's request that KoPT not assign the next vessel for unloading "till such time the cargo on the jetty is fully evacuated or substantial space is available on the jetty for discharge of cargo."³⁰² KoPT's position was that "[p]oor evacuation owing to dearth of space at storage yard, as alleged by you is not acceptable," particularly as additional stacking space already had been allotted; KoPT alleged that the real problem was "improper stacking of cargo at concerned storage yard by you."³⁰³

188.

Additional operational issues also cropped up during 2011. In April 2011, there was a dispute over responsibility for unloading export cargo from railway rakes. HBT took the position that this was not within its contractual scope, and the relevant equipment was not included in the Contract list of "[m]inimum number of equipment" to be supplied and operated. KoPT disagreed with HBT's reading of the Contract.³⁰⁴ There were also recurring complaints about the functioning of HBT's weighbridges, with KoPT repeatedly requesting corrective action between July and November 2011.³⁰⁵ HBT's December 2011 notice to its supplier confirmed the "repeated failure & malfunctioning" of the weighbridge equipment and blamed the equipment failure for its loss of 60,000 MT of monthly cargo.³⁰⁶ KoPT again complained about the weighbridges in December 2011 and January and April 2012.³⁰⁷

189.

HBT's inability to meet MLP targets, for all of these reasons, resulted in a recurring dispute about HBT's invoices and KoPT's payments. On 30 May 2011, HBT asked KoPT for a meeting under the Contract's amicable dispute settlement clause, to discuss several outstanding issues, including a dispute about KoPT's deduction of liquidated damages, and HBT's complaint that infrastructure issues, including the poor arrival condition of the cargo, were impeding optimization of its operations.³⁰⁸ On 8 June 2011, HBT appealed to the MoS for support, indicating that KoPT had not responded to its request for an amicable settlement meeting.³⁰⁹ Ten days later, on 18 June 2011, HBT again requested the MoS to intervene and direct KoPT to reverse invoice deductions and make payments.³¹⁰ On 24 June 2011, HBT filed a Writ Petition in the Calcutta High Court against the deductions made by KoPT from its invoices and to recover payments.³¹¹ The petition was withdrawn in light of a settlement meeting held on 12 July 2011,³¹² during which HBT repeated its concerns about the invoice issues, and again requested a reduction in the MLP "due to inadequate infrastructural support." KoPT declined HBT's requests, stating as to the latter that HBT "was aware of the infrastructural situation of the two berths while bidding for the contract and inspected the area in terms of clause 3.1 of the contract, hence there was no point in raising the issue now." KoPT also again insisted that HBT was responsible for unloading of export cargo from the railway rakes.³¹³ In the absence of a negotiated resolution, HBT filed another Writ Petition on 29 August 2011, seeking rulings on the payment issue and also demanding Central Government supervision and direction to KoPT, to ensure appropriate implementation of the Project.³¹⁴ On 15 December 2011, the MoS belatedly responded to HBT's 8 June 2011 and 18 June 2011 letters about the invoice disputes, "regret[ing] that instructions to KoPT under Rule 111 of the Major Port Trust Act, 1963 cannot be issued as the dispute between [HBT] and KoPT is that of a commercial nature involving contractual commitments."³¹⁵

190.

The payment dispute continued to fester, however, with HBT on 23 April 2012 demanding "immediate and complete payment of outstanding dues," including reversal by KoPT of various penalties and liquidated damages deductions that HBT challenged. It reminded KoPT that "the rates quoted by us are the lowest in the country," and stated that "we were forced by the labour unions to hire a large number of surplus employees prior to the start of our operations." It stated that together with declining volumes of cargo handled, the excess labor resulted in HBT's "incurring huge losses in running our operations," which were compounded by the outstanding invoice amounts. HBT stated that it had "now reached a critical situation where we no longer have funds to purchase fuel, pay salaries and carry out maintenance of our equipment or to make any payments to our sub-contractors."³¹⁶

191.

The record also reflects that KoPT's allocation of cargo to the Berths during the operational period from fall 2010 through mid-2012 was well below the volumes that LDA states it had anticipated, at the time of its bid, in order to offset the low margins from its very low bid price.

192.

As noted above, LDA contends that in September 2010, KoPT's Chairman Mr. Meena promised that in return for hiring the Five Star cargo pool, KoPT would allocate HBT at least 900,000 MT of cargo per month, amounting to 10.8 MMT per year.³¹⁷ Mr. Meena denies any such promise, noting that the Contract guarantees no minimum cargo amount, that he "had no reason whatsoever" to make such a commitment in violation of the Contract terms, and "[i]ndeed, I could never have done so" because "[t]he assignment of ships to berths rests primarily on user preferences … and I could never have promised to unilaterally override them."³¹⁸ India also contends that LDA's claim of a KoPT promise is inconsistent with the absence of any written complaints from HBT to KoPT, prior to March 2012, about receiving insufficient cargo.³¹⁹

193.

Whatever the state of HBT's communications with KoPT, it is clear that internally, the company was worried early on about cargo levels. HBT's internal profitability analysis from February 2011 observed that its "[b]reak even" rate was expected to be 600,000 MT per month, and notwithstanding the assurance of 900,000 MT per month that HBT believed it had received from KoPT's Chairman, actual volumes were around 400,000 MT per month. HBT's proposed solutions included to "[i]mprove relations with KoPT," to "[s]tart handling export Cargo (presently handling only import cargo), KoPT's concurrence required," and to "[c]onvince KoPT to allow use" of a third Mobile Harbor Crane."³²⁰

194.

LDA contends that the issue of inadequate cargo allocation (along with the pending invoice disputes) was raised at a meeting in Kolkata in December 2011 with the KoPT Chairman (Mr. Meena), but that Mr. Meena "merely told us that he had done all that he could to help us."³²¹ According to LDA, the KoPT chairman instead suggested that HBT engage directly with Ripley's owner, Mr. Bose, to discuss various operational hurdles, and thereafter organized a meeting with Mr. Bose at Mr. Meena's house on 15 December 2011. That meeting was allegedly "infructuous," with Mr. Bose attempting to interest LDA in collaborating on a different project and disclaiming any interest in operations at Berth Nos. 2 and 8 at HDC.³²² Mr. Meena denies any recollection of such meetings, but states that even if he may have discussed operational problems with HBT, he never would have proposed a meeting with Mr. Bose or any other third party as a way to work through the implementation of a KoPT contract with HBT.³²³

195.

Be that as it may, a few months later, on 5 March 2012, HBT wrote to KoPT to "once again … bring to your kind notice that the [Berths] are underutilised." It contended that "[t]he project was envisaged on an estimated volume of at least 8 Million tons of cargo per annum but the trend during the last 17 months indicates that approximately 5.5 Million tons per annum of volume will be handled …. The heavy shortfall in the cargo volumes is rendering the Project uneconomical and unviable." HBT referred to the clarification KoPT had issued during the Tender process to Section 1.39 that KoPT's "present policy" was to allocate "commodities … of the major steel industries" to the Berths but "whenever vessels a/c Steel Industries will not be there at these berths, [other] commodities … as may be decided by the port from time to time will also be handled" at the Berths. It requested KoPT accordingly to "provide more volumes of cargo …."³²⁴

196.

On 23 April 2012, in the context of a letter to KoPT regarding the ongoing invoice disputes, HBT again raised the cargo volume issue. This time it stated that "[t]he available draft in the navigable channel has also been steadily dropping thereby resulting in very low volumes being handled" at the Berths.³²⁵ The May 2012 annual reports of HBT, ALBA and ABG Infra for the year ended March 2012 – the only full year of operations – similarly attributed the low cargo volumes to an overall decline in traffic at the Haldia Port.³²⁶ LDA now contends that these publicly filed documents did not purport to address "the catena of obstacles and problems [HBT] was facing."³²⁷

197.

In any event, by the summer of 2012, as discussed further infra, HBT's concerns about the cargo volumes had reached a critical point, leading it to contemplate a suspension of operations.

198.

The Parties disagree about the percentage of HDC's overall compatible dry bulk cargo that ultimately was allocated to the Berths during the Contract period. LDA maintains that HBT received only 32% of the compatible dry bulk cargo in the HDC during the operational period, despite HBT's operations being more efficient than other operators' berths.³²⁸ India criticizes LDA's figures on several grounds, including that Berth Nos. 2 and 8 could not handle certain types of dry bulk cargo, that HBT generally refused to handle export cargo because of a dispute about whether it was obligated to purchase an excavator for unloading export rakes, and that KoPT was contractually obligated to supply 2 MMT on cargo to another berth.³²⁹ India submits that in 2011-2012, HBT actually handled at least 53%of the total compatible dry bulk cargo,³³⁰ which it contends was as much as KoPT reasonably could allocate to it, while taking into account constraints imposed by user preferences and by HDC's various shore handling problems.³³¹ LDA contests India's evidence and contends in any event that these shore handling issues were at most "teething" issues, which KoPT used as an excuse not to allocate additional cargo that HBT could have handled,³³² particularly if it had been allocated larger or closer storage yards or if KoPT took steps to improve other infrastructure constraints.³³³

199.

By the summer of 2012, the various issues that had plagued the operational period were each coming to a head.

200.

First, HBT received a vivid reminder in June 2012 about the volatility of local labor issues and the power of local unions. On 16 June 2012, after it issued a termination letter to two of the management staff on disciplinary grounds, HBT reported to the police by telephone that "about 100/150 workers … are gathered and showing agitation at HBT office," and requested police intervention. The police sent officers to the scene, who recorded later that evening that the "agitated workers had dispersed" from the HBT office area without any reported "incident of assault or manhandle …."³³⁴ HBT's summary of the day's events, sent to the police a few days later, recounted that a crowd had surrounded an HBT car, forced the HBT officers out, and angrily demanded the employees be reinstated, insisting that HBT had no power to terminate employees, only to suspend them or shift them to other departments.³³⁵

201.

Then, on 18 June 2012, some 150-175 people reportedly protested outside HBT's offices, and at least 25 people entered it for a sit-down protest.³³⁶ HBT sent a formal letter to KoPT's Chairman in Kolkata, asking for KoPT "to immediately take suitable actions to defuse" the situation.³³⁷ In the meantime, HBT also called the local KoPT "Traffic Manager" at HDC, who "was very understanding and suggested that HBT should try to contact" the INTTUC union leader, "who can address and help in the matter." The union leader invited HBT to a meeting, at which he explained that under applicable labor laws in West Bengal, HBT could not terminate anyone directly, but rather must first issue a "show cause notice" with a temporary suspension. HBT responded that the "appointment letters" the employees had signed permitted termination. The union leader requested HBT in any event to reconsider the termination. The same evening, a strike was called at Berth Nos. 2 and 8 stopping all work for about four-and-a-half hours. The situation at the Berths reportedly had returned to normal by the next morning, 19 June 2012, but HBT kept its office closed as a precaution, later learning that a group of about 25 people had gathered there but then dispersed. On 19 June 2012, HBT filed a detailed report of this chronology with the local police, noting its fear that the "mob will gather around our office" again.³³⁸ LDA claims that later that evening, two HBT officials were assaulted by another individual and "forced to reinstate … employees,"³³⁹ but it appears that no police report of this assault was filed.³⁴⁰ On the morning of 20 June 2012, HBT telephoned the police to report that a crowd had assembled again overnight in front of the HBT offices, and police records report that they visited the offices and "[a]fter prolonged discussion with the higher officials of HBT all the agitated workers had left the office campus."³⁴¹

202.

Second, HBT began to threaten a suspension of operations if KoPT did not increase its allocation of cargo to the Berths. On 4 July 2012, HBT wrote to protest that the volumes allocated had been "unexpectedly low," with HBT handling around 5 million MT per year rather than its estimated volume of 9 million MT, around which HBT stated "[t]he entire infrastructure is designed … and hence it is imperative … to sustain its fixed and variable costs," particularly in light of "our extremely low tariff, which is lowest in the country." HBT indicated that its break-even point was 7.5 million MT per year, and "beg[ged] [KoPT] to allocate us the requisite volumes at our berths so that we may achieve breakeven," otherwise it would "suspend operations and stem our losses."³⁴²

203.

On 20 July 2012, KoPT convened a meeting among HBT, the INTTUC union, the Five Star agency representing cargo pool workers, and other Port stakeholders, including a representative from Ripley. The purpose was to discuss a union threat that the cargo pool workers would work only for four hours unless their wages were increased. KoPT reportedly stated that this was an "internal matter between [HBT] and Five Star," but that "any action that delays operation will directly impact the end users" who will be deterred from bringing more cargo to the Port. KoPT requested "all to arrive at solution and keep stoppage of cargo ops completely out of the process," while resisting union efforts to characterize it as the "Principal Employer" to the wage negotiations. Meanwhile, HBT insisted that its revenue would not support additional payments to workers unless it received more cargo. KoPT stated that "there are many constraints in increasing the cargo inflow into Haldia beyond anyone's control." The meeting adjourned with no progress, but HBT privately expecting the cargo pool to make good on its threat of reduced work hours and concerned that the risk of a labor "Gherao" of both "[HBT] and [KoPT] officials remains on the anvil."³⁴³

204.

Separate from the continuing dispute with Five Star, by August 2012, HBT and its ultimate parent companies (LDA and ABG Infra) were actively considering a significant retrenchment of surplus labor, which they considered to be a "huge strain on HBT's resources."³⁴⁴ This issue is discussed further below.

205.

Finally, in late August 2012 KoPT floated a tender for mechanized operations at Berth No. 4B, which HBT worried would create further competition for cargo allocation. LDA's witnesses contend that this was inconsistent with an alleged contractual obligation to "mak[e] optimal use" of HBT's equipment and "ensure that our equipment does not remain idle," which KoPT could have fulfilled by "deploying our spare [Mobile Harbor Cranes] at other berths" rather than pursuing a new tender for a competing mechanized operator.³⁴⁵

206.

In the absence of any resolution of HBT's concerns, on 23 August 2012 it issued a Notice of Suspension to KoPT.³⁴⁶ In the Notice, HBT stated that it would cease operations by 8 September (later revised to 12 September) unless it saw an increase in the allocation of cargo to its Berths, stating:

In spite of repeated reminders and [p]etitions KoPT has, for reasons best known to them, failed and neglected to remedy and resolve the various grievances and claims which continue to plague the Project.... You will appreciate, that since HBT is already incurring huge financial losses, unless adequate cargo is allocated to berth nos. 2 and 8, as proposed above ["at least" 750,000 MT per month], HBT would not be left with any other alternative, but to suspend cargo operations.³⁴⁷

207.

By e-mail and letter, dated 23 and 24 August 2012 respectively, KoPT denied that the Contract provided any guaranteed minimum cargo allocation, insisted that HBT continue operations, and invited HBT to a meeting on 31 August 2012 to discuss the matter.³⁴⁸ In advance of the meeting, KoPT discussed internally the various issues HBT had raised. It observed regarding cargo allocation that a "policy decision" would be required, since on the one hand "there is no cargo commitment" to HBT in the Contract, but on the other hand it "was financially beneficial for KoPT" to place cargo at the Berths whenever they were vacant, even though "there have been occasion when the importers have expressed their reluctance to work their ships under [HBT] handling for various shore related problems." Because this involved a "policy related issue which cannot be looked into from operational point of view alone," no commitment could be given to HBT in the upcoming meeting. As for HBT's security concerns, "it was agreed that KoPT would ensure providing general security in the port premises, no such guarantee could be given for the incidents happening outside port." Finally, with respect to any termination by HBT of its "additional workforce including those of … Five Star Shipping engaged by [HBT] through contractors," this was considered an "internal matter" of HBT, with which "KoPT had got nothing to do…."³⁴⁹

208.

The meeting was held as scheduled and HBT and KoPT agreed to form a joint committee for the settlement of the disputed issues.³⁵⁰ On 2 September 2012, KoPT nominated its representatives to the committee, and requested HBT to do so as well.³⁵¹ On 5 September 2012 HBT stated that "[d]iscussions … were initiated a long time ago, and … the same has led to no result." HBT again requested at least 750,000 MT of cargo per month be allocated "immediately" to the Berths, "failing which, it would lead to suspension of cargo handling operation" beginning 8 September 2012. "The remaining issues can thereafter be jointly addressed and considered by the joint committee as proposed by you."³⁵²

209.

LDA's witnesses contend that at a further meeting on 6 September 2012 between Mr. Agarwal of ABG Infra, Mr. M. Jain (KoPT's Acting Chairman) and Mr. Adhikari (the INTTUC representative and Member of Parliament), Mr. Agarwal broached the possibility of a large-scale retrenchment in connection with its threat to suspend operations, and obtained some measure of reassurance.³⁵³ Mr. Agarwal testified that Mr. Adhikari warned that a retrenchment of 350 workers would spark a "bloodbath," but then stated that he could "manage" the hostility arising from retrenchment of 275 workers, which Mr. Agarwal took as a "blessing" from both Mr. Adhikari and KoPT to proceed at that level.³⁵⁴ By contrast, Mr. Jain testified that the meeting was held "to discuss the possible impact on the labour force if HBT suspended operations," about which Mr. Adhikari was "very concerned."³⁵⁵ In the context of these concerns, Mr. Jain stated that neither he nor Mr. Adhikari would have blessed any plan for HBT "to let go of half of its workers," which was sure to cause unrest that would threaten disruption of operations.³⁵⁶

210.

In the wake of this meeting, and still on 6 September 2012, LDA and ABG Infra decided to move forward with the suspension of HBT's operations. Despite what they understood to be Mr. Adhikari's agreement that he would "cooperate[]" if HBT had to reduce its bloated workforce, LDA and ABG considered that this still would be insufficient to stem HBT's losses, without a significant concurrent boost in HBT's revenues.³⁵⁷ At best, LDA and ABG Infra agreed, the labor cost savings would "sort about 15% of our problem," with 85%of HBT's losses (mainly attributable to low cargo volume) still unresolved. That necessitated suspending operations, to "try to be in a position where the Contract … can be renegociated [sic]." HBT's plan upon suspending operations was to discharge all of its employees, which would "allow us to dispose of those union people who are deliberately damaging our [equipment], and bring people we can trust" when HBT resumed operations.³⁵⁸

211.

The same day, however, KoPT filed a Petition in the Calcutta High Court seeking an injunction preventing HBT from suspending operations.³⁵⁹ On 7 September 2012, "[a]t the request of the Court," HBT agreed to extend the planned date of suspension from 8 to 12 September 2012.³⁶⁰

212.

Meanwhile, in an internal meeting on 7 September 2012, KoPT observed the following, inter alia :

• "[D]uring 2011-12 about 49% of the total... dry bulk cargo... was handled at berth no 2 & 8."

• "The productivity of ships handled by MHC at these 2 berths has substantially improved... The use of MHC has also resulted in HDC's capacity to serve gearless ships and the users like SAIL, Tata etc. have increased their cargo booking in gearless ships."

• "[T]he operating profit generated from each ton of cargo handled at Berth No. 2 & 8 is above Rs150/- compared to other multipurpose berths where the dry bulk cargo is handled

• "However,... allocation of cargo is not merely based on the ability to unload from the ship but also depends upon the rate at which the cargo is evacuated from the storage area throughout the year. HBT has been able to achieve a maximum evacuation about [500,000 MT] in May, 2011.... At this peak evacuation rate HBT can at best evacuate 6 million tons of cargo per annum.... This is restricting the possibility of allocating more cargo... for handling by HBT."

• "It has clearly stipulated in the contract that there would be no [minimum guaranteed tonnage] commitment from the KoPT. Therefore, HBT cannot demand for MGT commitment of [750,000 MT] of cargo per month...."

• "As regards manpower, the contract clearly speaks that the same is the responsibility of HBT.... KoPT cannot be made a party to the retrenchment of the alleged surplus manpower contracted by HBT."³⁶¹

213.

KoPT also expressed concern that a sudden stoppage of work by HBT could harm major steel industries who were relying on KoPT, and "[t]he interest of the industries … in the hinterland … would be severely jeopardized."³⁶² In addition, "[t]here would be a potential law & order threat both inside & outside the dock at HDC … as [HBT's suspension of work] would lead to loss of employment of a large number of personnel. Operation at other berths of the port may even come to a standstill due to widespread labour unrest."³⁶³ Based on all these factors and after extended debate, KoPT's Board of Trustees decided to inform HBT that "while KoPT was not contractually obliged to give any commitment on MGT to them, it would examine the possibility of making suitable operational arrangements … whether KoPT could provide more vessels to Berth Nos. 2 & 8 subject to [HBT] taking steps for faster evacuation of cargo … like proper maintenance of rail/road weighbridges, etc. … [This] possibility should be examined by a Joint Committee of officials of HBT and KoPT."³⁶⁴ KoPT reported as much to HBT by letter dated 7 September 2012, and requested HBT to accept the proposal of the Joint Committee.³⁶⁵

214.

KoPT also reported to the Chief Secretary of the Government of West Bengal that in its internal meeting, it had "resolved to explore the possibility of providing more cargo to HBT," notwithstanding that "there is no mention of minimum guarantee tonnage in the existing agreement," in light of "the utilization percentage of berths and other relevant factors … in the interest of Trade & Industries of the hinterland." KoPT envisioned however that "while we are following up the issue of additional cargo with HBT, we need the intervention of State Government at appropriate level to address their issue of large work force and local law & Order problems, as any disruption to the smooth operation of port at these two berths" would affect many important end-users, "caus[e] colossal loss … to the port," "cause law and order problems inside and outside port area besides," and "may lead to diversion of cargo to other ports due to non availability of alternate mechanized facilities at HDC …." KoPT requested the State Government to "issue suitable instructions … for early intervention in the matter."³⁶⁶ Two days later, on 9 September 2012, KoPT sent an almost identical letter to Mr Adhikari, stating that "we need your intervention also to address their issue of large work force and local law & Order problems…."³⁶⁷

215.

For its part, on 7 September 2012, HBT reported to LDA and ABG Infra its own internal assessment of the situation. It was unimpressed by KoPT's "talks of endeavours and setting up of a committee," particularly "against the backdrop" of HBT's continued losses with current cargo volumes, the fact that KoPT had recently issued a tender for mechanization of another HDC berth, and "[f]alling over all cargo volumes at HDC." HBT considered that suspension of work could make KoPT to "finally take notice and realise that they can no longer push us around," and provide a "real chance to reduce workforce." It "fully realise[d] that Kopt cannot give us a [minimum guaranteed tonnage," but "[w]e could get from them priority utilisation" of the Berths, and perhaps attention to other HBT wish-list items, such as a Contract rider allowing it to reduce its deployed equipment depending on cargo volume, cancellation of the new tender for a competing mechanized berth, and a commitment of "NO MORE MECHANIZATION OF BERTHS."³⁶⁸ As of 11 September 2012, LDA and ABG Infra were discussing imminent plans for the retrenchment of all 626 workers at HBT, as part of a planned suspension of operations.³⁶⁹ HBT also informed the West Bengal Government on 11 September 2012 of its intention to suspend operations the next day, "[u]nless a firm commitment on volume is given."³⁷⁰

216.

Later that day, however, HBT and KoPT reached a settlement agreement to prevent the suspension of operations.³⁷¹ The next day, 12 September 2012, the Calcutta High Court recorded the "Terms of Settlement" in the form of a Consent Order.³⁷² As reflected in the Calcutta High Court document, the agreed terms included, inter alia, that "[d]ry bulk vessels … will be allocated to berth nos. 2 or 8" unless those berths were busy, subject to certain KoPT contractual obligations to other berth operators; that KoPT would "maximize the utilization of HBT's equipment" by relocating its Mobile Harbor Cranes to other berths when Berth Nos. 2 and 8 were vacant; HBT would be allowed to use a third crane at its Berths to improve productivity; and KoPT "shall resolve" the pending invoice disputes.³⁷³

217.

The Consent Order had almost immediate ripple effects. Operators at other berths, including Ripley, attempted to appeal, contending that the terms of the Consent Order envisaged preferential treatment of HBT by KoPT, and would lead to business losses.³⁷⁴ These appeals were dismissed by the Calcutta High Court on 26 September 2012.³⁷⁵

218.

In the meantime, however, on 14 September 2012, Ripley (which ran cargo operations on other berths at HDC) wrote to KoPT to announce that it would have "no other alternative but to retrench" its workers handling bulk cargo, because KoPT's reported decision that "all bulk vessels will go to" HBT's Berths would mean that "there will be no cargo at other berths where our work force is engaged to handle the vessels."³⁷⁶ The next day, HBT reported internally that KoPT was planning to allocate a coal vessel to HBT's Berths "but expect to have some resistance on the berth from Ripley on that account"; "[t]here is a feel of gloom and foreboding in Haldia and people are expecting there to be some violence/trouble over the next few days."³⁷⁷ KoPT was also girding for protests, alerting the District Magistrate (with copies inter alia to the local police, the CISF, and the Home Secretary of the Government of West Bengal) that it expected a "deterioration in the law and order situation outside the dock area" of HDC, and that while "[t]he CISF Unit of Haldia Dock Complex has already been advised to beef up security inside the dock area … we need assistance from the State [Government] in maintaining law and order situation outside the dock area."³⁷⁸

219.

As foreseen by KoPT, labor protests against the Consent Order began almost immediately, initially outside the dock area and targeting KoPT and HDC officers themselves. On 18 September 2012, KoPT notified the police that a group of 200-250 workers, mostly from Ripley and another operator (A.M. Enterprise), had gathered to protest outside of the main HDC offices; according to the INTTUC labor leader, "[t]hey were protesting against KoPT's decision to take vessels at Berth No. 2 & 8 on priority over other berths" under the Consent Order, which would lead to retrenchment of workers employed on other berths. KoPT reported that the crowd was blocking the main gate of its offices and "not allowing any Port Officials or vehicles to pass through." The police were requested to take action "so that the blockade at the gate is lifted forthwith."³⁷⁹ By KoPT's account, the police thereafter intervened and the workers "lifted the blockade of the office"³⁸⁰; police records suggest that no active intervention was needed, as the officer who visited the site of the demonstration (at least upon his arrival) reported the site to be "peaceful," with no obstruction of the gates.³⁸¹

220.

However, on 19 September 2012 there were similar demonstrations at the HDC offices, temporarily blocking the gates,"³⁸² and on 20 September 2012 "around 300 workers having allegiance" to INTTUC "again gheraoed both the gates" of HDCs offices, reportedly "threatening to carry out physical assault" on named HDC officers,³⁸³ and expressing concerns about "retrenchment by their employers in view of anticipated fall in cargo handling" at their berths.³⁸⁴ On 19 September 2012 KoPT again wrote to the Home Secretary, reporting that the events it had anticipated in its letter of 15 September had now occurred,³⁸⁵ and on 20 September 2012 it appealed to the police for assistance,³⁸⁶ separately forwarding its FIR to the District Magistrate and requesting "necessary action" to provide security and ensure safe movement at the HDC offices.³⁸⁷ The police did send officers on both occasions, but found the demonstrations (upon their arrival) to be peaceful and not obstructing normal movement in and out of HDC.³⁸⁸ KoPT subsequently told the police that it had learned the blockade of its offices was planned to continue "from tomorrow,"³⁸⁹ and on 21 September 2012 KoPT reported that "about 150-200 workers have once again gheroaed" the HDC offices.³⁹⁰ According to an internal CISF report, the INTTUC representative Mr. Adhikari vowed that union members would continue their agitation and demanded that KoPT "should stop partisan attitude towards the agitating workers because they have genuine demands,"³⁹¹ but the police officer detailed to investigate again found the demonstrations to have been peaceful and not unlawful.³⁹² On 21 September 2012, the Haldia Dock Officers' Forum requested assistance from KoPT, which forwarded their letter to the District Magistrate and the police.³⁹³ The same day, KoPT's Chairman asked the MoS to excuse him from a planned delegation to the United States, citing the turmoil in front of its offices but also noting that "[t]ill now there has been no disruption inside the dock area."³⁹⁴ On 22 September 2012, CISF personnel were deployed on an emergency basis at a CPT guest house outside the dock area, in response to a gathering of about 70 workers of Ripley and A.M. Enterprises.³⁹⁵

221.

On 24 September 2012, KoPT wrote to the Chief Secretary of the Government of West Bengal, copying inter alia the police and District Magistrate, to report that "recently, the smooth functioning of HDC has come across severe impediments created by some vested interests group. The KoPT employees … are getting regular threats and intimidation by some musclemen … and they are passing through a state of constant agony and worry for their safety." KoPT enclosed an appeal from the Kolkata Port Officers' Federation "for restoration of peace" at HDC, and requested intervention "so that confidence of the port employees can be restored and the port can undertake cargo operations smoothly in the dock."³⁹⁶ The District Magistrate forwarded both letters to the local police, requesting it to "take necessary action in this regard,"³⁹⁷ and the Superintendent of Police likewise forwarded the letters to the local station.³⁹⁸

222.

Meanwhile, notwithstanding the protests, vessels still continued to arrive at HDC and required allocation among its various berths. LDA complains that KoPT was slow to allocate vessels to HBT's Berths after the Consent Order,³⁹⁹ a contention with which India disagrees.⁴⁰⁰ Among other things, the record reflects that on19 September 2012, KoPT informed one vessel owner that had specifically requested assignment to a berth other than Berth Nos. 2 or 8, on account of its perception of a "higher turn around time at these berths" due to HBT's shore handling issues,⁴⁰¹ that KoPT nonetheless was assigning the vessel to Berth No. 8.⁴⁰² HBT remained pessimistic that there would be a significant increase in its allocations, noting that "Berth 2 rec[eived] last vessel on 31 Aug[ust]" and "[f]rom the current position of vessel line up we shall be lucky if we get 5 vessels" in the next period.⁴⁰³ By 20 September 2012, however, HBT reported that "[w]e now have vessels working at both our berths."⁴⁰⁴

223.

Amidst this rising turmoil, and notwithstanding the Consent Order recently agreed with KoPT to forestall a suspension of operations, LDA and ABG Infra decided to move ahead with significant reductions to HBT's workforce. HBT evidently did not view the Consent Order – reflecting KoPT's agreement to prioritize cargo allocation to HBT's Berths – as alleviating the separate burdens imposed on it by excess labor. Indeed, its witness Mr. Malhi testified that "[o]nce the Consent Order had been passed on 12 September 2012, we came to the conclusion that the express commitment by KoPT to allocate cargo more optimally was an appropriate opportunity to salvage the Project and make it commercially viable" by significantly reducing labor costs.⁴⁰⁵

224.

On 15 September 2012, in the wake of KoPT's notice that it expected some resistance to its allocation of a new vessel to HBT, HBT discussed the currently volatile labor situation at HDC. It observed that there was rising "factionalism on the ground" between the CITU union associated with the "Left Front," which was "now gaining power" in Haldia and was "blaming the TMC & Ripley for the issues" troubling HBT's operations, and the INTTUC union associated with TMC. HBT predicted "different power centers emerging in the coming weeks," with expectations of "some violence / trouble over the next few days," and acknowledged that "[g]iven the present scenario our retrenchment plan may be the spark that may set it all off since the different unions will try and force us to take them back." Nonetheless, it considered that "this may be the only opportunity that we may have to take this action, without which we may not be able to survive."⁴⁰⁶ On 20 September 2012, HBT's management informed its Board of Directors that "[t]he Management had decided to retrench the 275 workers of the Company," and asked for Board approval to proceed, which was promptly granted.⁴⁰⁷

225.

Meanwhile, on the same day – 20 September 2012 – Five Star demanded that HBT pay a substantial sum for cargo pool services, claiming that unless HBT released these sums within 48 hours, Five Star would be unable to issue the workers with holiday bonuses and statutory payments.⁴⁰⁸ Following "a meeting called by the Cargo Pool labor union … all cargo pool got off the vessel[s]" then working at both the Berths and refused to return for five hours, and since then "have been working extremely slowly …." The workers apparently "have been told to tell us that due to non payment they have been asked to go slow on the work."⁴⁰⁹

226.

On the evening of 22 September 2012, HBT notified Five Star (copying KoPT) that it was "extremely dismayed" to have received letters from KoPT "expressing their dissatisfaction with the work carried out at [the Berths] which squarely falls within your scope of work," and that "[s]ince you are unable to perform the services for which you have been engaged, we have no option but to discontinue your services with immediate effect."⁴¹⁰ Within minutes, HBT separately e-mailed KoPT to alert it that the cargo pool managed by Five Star is "no longer engaged by us,"⁴¹¹ a step which KoPT viewed as "undermin[ing] the [Consent Order]."⁴¹² HBT also alerted KoPT that its employees and managers were now "being threatened by the Cargo Pool against working on the vessels" docked at the Berths, and that until "the Cargo Pool Labour … [was] removed" from its Berths, "we will not be in a position to carry out our obligations."⁴¹³ CISF records indicate that an "[a]dditional deployment [was] made at Berth No. 2" but it is unclear how long the CISF personnel stayed in the area.⁴¹⁴ HBT apparently did not appeal directly to the police about any incident on the evening of 22 September 2012,⁴¹⁵ and the police daily logs contain no entries about an incident at the Berths on the evening of 22 September 2012.⁴¹⁶ The next morning, however, HBT reported to KoPT that after midnight – about five hours after HBT's first evening e-mail to KoPT – "amobof around 200 unknown person[s]" had blocked cargo discharge operations at Berth No. 2, forcing HBT to "suspend all cargo handling operations" at that berth. HBT stated that "[t]he port has once again failed in its duties under the contract to provide for a safe and amiable working environment."⁴¹⁷

227.

On 24 September 2012, KoPT wrote to HBT that under the Contract, "the manpower... is to be arranged by HBT & KoPT is not in any manner concerned with the sourcing of labour," provided HBT carried out its "Scope of Work," and noted that HBT had never formally notified KoPT of the engagement of Five Star as a subcontractor. With respect to security issues, KoPT stated under the Contract that it was to provide "general security inside the dock area for your employees with the help of CISF as per usual practice," but "[i]t may be appreciated that the CISF is there to protect the Port properties but Law & Order is maintained by the State Government." KoPT indicated it had informed HBT in the past to take up any "Law & Order problem" with the appropriate State authorities, and requested a copy of any FIR that HBT had filed recently with the police. KoPT closed its letter by requesting HBT "not to resort to any such decision which may lead to Law and Order problem with out consulting us," and insisting that HBT "continues to carry out cargo operations at [the Berths] as per its obligations under the Contract."⁴¹⁸ The same day, KoPT separately advised HBT that it had scheduled a meeting of "all the stakeholders" on 27 September 2012, "with a view to identifying the issues" underlying the "current impasse at [HDC] leading to disruption in cargo and vessel handling operations" and "also to find out the possible solutions …."⁴¹⁹

228.

However, LDA and ABG Infra already had decided that same day (24 September 2012) that HBT should move forward with the retrenchment of 275 workers.⁴²⁰ It appears that the workers learned of their retrenchment first by text messages on 24 September 2012,⁴²¹ with HBT issuing formal retrenchment letters the next day to 275 workers.⁴²² HBT notified KoPT of the retrenchment, invoking both the "acute financial constraints" it had faced since the commencement of operations and "large scale indisciplined [sic] activities on the part of the workmen," including "large scale rioting activities." HBT recited that it had been "compelled to bear the unnecessary burden of paying idle wages to a huge surplus work force almost since the beginning of the contractual period," and that "[t]he complete erosion of discipline has further added to the already eroded economic structure of HBT." HBT explained that retrenching the "surplus workmen" had become necessary "for sheer survival of the Company and also to protect the employment of the remaining 350 workmen."⁴²³ On the morning of 26 September 2012, HBT asked KoPT to cancel the dock passes of the retrenched workers.⁴²⁴

229.

The same day that HBT issued its formal retrenchment notices, KoPT wrote to the MoS, asking for it to request the Government of West Bengal to intervene to ensure law and order in the area.⁴²⁵ The MoS followed through, requesting the West Bengal authorities to "pass necessary instructions to law enforcement agencies so that law and order situation both inside and outside the dock do not deteriorate."⁴²⁶

230.

Meanwhile, the situation on the ground continued to be volatile. According to a CISF report, on the evening of the retrenchment Mr. Adhikari (the local Member of Parliament and INTTUC union representative) had appealed to the retrenched workers (as well as workers of Ripley and Five Star) to "continue their agitation in peaceful manner and also … enter the dock premises with valid entry pass only."⁴²⁷ However, on the next day (25 September 2012), HBT reported to the police that its workshop had been "ransacked" overnight and various equipment stolen,⁴²⁸ and the police went the same day to investigate.⁴²⁹ Several constables were also reportedly deputed to patrol generally around HDC, and reported "[n]o untoward incident" during the day on 25 September.⁴³⁰ On 26 September 2012, HBT reported to the police that retrenched workers had surrounded its staff and were forcing them to sign attendance cards notwithstanding their termination.⁴³¹ The same day, HBT informed KoPT that given security concerns it would not be able to attend the scheduled "stakeholders" meeting at Haldia on 27 September 2012, and requested that the meeting be moved to Kolkata.⁴³² It also informed KoPT that "[u]nder the circumstances it has become impossible for HBT to carry on with the said Project."⁴³³ An internal CISF report summarized the situation over these days as involving "workers of Ripley, AME & ABG … sitting on dharna⁴³⁴ and [demonstrating] suddenly on various points inside and outside the Port area without prior notice for several days," with the CISF complaining that the "local police is either not at all coming or coming very late just to show their presence."⁴³⁵ The police log entry for the day states that "[a]fter reaching" Berth No. 2 in response to a report of "chaos" there, "the mob was dispersed peacefully and the situation became normal. No injury or physical assault was reported."⁴³⁶

231.

On 27 September 2012, KoPT proceeded with the "stakeholders" meeting in Haldia (without HBT attendance),⁴³⁷ with "about 250-300" retrenched workers reportedly staging a "dharna … in peaceful manner" outside the building where the meeting was being held.⁴³⁸ During the meeting, KoPT's Chairman suggested that "the current impasse plaguing Haldia Dock for over the last 3-4 weeks, necessitates a collective endeavor to identify root causes …and … arrive at a solution within the sociopolitical framework prevailing at Haldia." He identified a recent decline in cargo throughputs at the Port attributable both to a general recession and to the Port's "perennial draft problem," but expressed confidence that in light of efficiency and infrastructure improvements, cargo flow should increase "[a]s soon as the matter related to transloading process is solved."⁴³⁹ Leading users of the Berths insisted that the situation was of "grave concern," with their cargo piling up at the stockyards for these Berths rather than being dispatched,⁴⁴⁰ and their being compelled to take vessels to other berths at extra costs.⁴⁴¹ The next day, the KoPT trustees resolved to ask the State government to convene a meeting of all stakeholders; to ask stakeholders to "take all possible measures … to maintain peace" at HDC; and to ask HBT immediately to resume work in light of the Consent Order.⁴⁴² KoPT followed up directly with the State Government.⁴⁴³

232.

On 28 September 2012, the situation reportedly turned more violent. HBT reported to the police, with copies to KoPT and others, that a "mob of about 400 persons" had arrived at Berth No. 2 "to try to and forcibly stop our ongoing operations," and had beaten several members of its staff,⁴⁴⁴ who as a result required medical treatment.⁴⁴⁵ While HBT subsequently contended that the CISF officers posted to Berth No. 2 had not "come to the rescue of those been assaulted,"⁴⁴⁶ CISF records state that it did dispatch a "mobile patrolling party … immediately" upon being informed of "some commotion" at Berth No. 2, and its officers upon arrival "prevented the manhandling" of two HBT staff and "shifted them in safe place," with the CISF then deploying "additional manpower" and the workers eventually dispersing.⁴⁴⁷ The police record of the evening however reports that "after reaching on the spot [its officer] found that some person were demonstrating peacefully and later on they disbersed [sic]," with again "[n]o injury or physical assault … reported."⁴⁴⁸ For its part, KoPT responded to HBT's police report by authorizing the police the next day to set up a "suitable camp office inside the port premises if you desire for maintaining the law and order in the port area, for which necessary space can be provided from KoPT side."⁴⁴⁹

233.

HBT reiterated its request to KoPT that dock entry passes for its retrenched workers be cancelled to "ensure that they do not enter the premises" of HDC.⁴⁵⁰ On 29 September 2012 HBT informed KoPT that "we do not have any option but to suspend work and … we will be able to resume work only after safe environment is restored."⁴⁵¹ The same day, the turmoil spilled out beyond the HDC area, with HBT reporting to police on 29 September 2012 that some of its workers had been "gheraoed at their residential areas,"⁴⁵² and that one of its staff and been attacked and injured outside the HDC complex.⁴⁵³ It appears that on 30 September 2012 a police officer was "directed to investigate the case."⁴⁵⁴

234.

During this period and continuing through HBT's eventual termination of the Contract, KoPT continued to notify HBT of its allocation of additional vessels to HBT's Berths,⁴⁵⁵ despite its own internal acknowledgment that work at the Berths had "remained suspended" since the night of 22 September 2012 and "[t]he Wagon/Truck loading of import cargo has also come to a stands till as HBT workers have refused to undertake the said job."⁴⁵⁶ LDA suggests that the continued allocation of cargo was to create a record of non-compliance with the Consent Order;⁴⁵⁷ India argues that it was because labor unrest from HBT's workers was not a force majeure event under the Contract.⁴⁵⁸

235.

On 30 September 2012, KoPT circulated a "Peace Message" to a wide group of recipients, stating that it had "taken all possible steps for ensuring normal port operations" in the face of mass demonstrations that were disrupting cargo handling operations, and had also requested support from the State Government and the local police. "However, the efforts taken by KoPT are being frequently thwarted by various groups who are trying to creat[e] impediments one after the other for fulfilling their own vested interests." It urged "all stakeholders" to assist in "restor[ing] normalcy," and invited them to participate in a meeting to be convened soon by the District Magistrate.⁴⁵⁹ In advance of that 4 October 2012 meeting, KoPT requested assistance from the police and the District Magistrate to ensure adequate security for it to proceed.⁴⁶⁰

236.

ABG Infra's Managing Director, Mr. Agarwal, contends that on 3 October 2012, the day before the 4 October 2012 "stakeholders meeting," KoPT's Chairman Mr. M. Jain proposed a private meeting between Mr. Agarwal and with members of the Bose family, who owned the competing cargo handling company Ripley. During this meeting, Mr. Jain is said to have "repeated his refrain about the 'room becoming smaller' and how Ripley and HBT must share the reduced cargo equally," Mr. Agarwal is said to have responded that HBT should not have to "share cargo that was rightfully HBT's (on account of our competitive operational terms)," and the Bose representative is said to have stated it would "allow" HBT to continue on the condition that it would not ask for more cargo, a statement with which "the [KoPT] Chairman made no attempt to intervene …."⁴⁶¹

237.

With respect to the larger-group meeting on 4 October 2012, LDA's witnesses state that HBT's attendees "stressed [their] desire to continue with the Project … but noted that [they] would be unable to do so unless the hostile atmosphere was contained."⁴⁶² They state that KoPT's Acting Chairman characterized the situation as a "socio economic politico problem," and emphasized that "the 'room' had become smaller, and we all had to learn to share the limited space."⁴⁶³ The outcome of the meeting was a decision by KoPT to constitute a working committee, composed of representatives of HBT, KoPT, and the other cargo handling agencies (Ripley, Five Star, and A.M. Enterprises).⁴⁶⁴

238.

Immediately following the meeting, HBT developed an internal list of "[n]on-negotiable Conditions Precedent for amicable settlement," which it intended to present at the working committee meetings. These included, inter alia, that KoPT would have to guarantee a minimum tonnage of 6.5 MMT per year to Berth Nos. 2 and 8; agree to let HBT deploy its spare Mobile Harbor Crane to another berth, No. 4B, while scrapping KoPT's pending tender for a new (competing) contract to mechanize that berth; excuse HBT's MLP requirement for reasons beyond its control; adopt a berthing policy where Berth Nos. 2 and 8 would be allocated vessels on a priority basis; and accept HBT's decision to not reinstate the 275 retrenched employees.⁴⁶⁵ On 8 October 2012, however, the KoPT committee members publicly circulated their own report of the discussions, which stated inter alia that HBT had agreed to consider a possible reinstatement of the 275 retrenched workers, after the cargo handling agencies had insisted that this was a predicate to "any further solution to the problem."⁴⁶⁶ HBT immediately protested KoPT's circulation of these "purported minutes … to the media as well," stating that the "meetings were informal and were held on a without prejudice basis," and denying all statements that had been attributed to HBT.⁴⁶⁷

239.

Meanwhile, on 8 October 2012, HBT reported to the police that a car transporting its management staff had been surrounded by a mob of about 100 people, who heckled and manhandled the staff and warned them not to attempt resuming work at HDC.⁴⁶⁸ The Superintendent forwarded the report to the local police station.⁴⁶⁹ On 9 October 2012, KoPT advised the District Magistrate that the INTTUC-affiliated union had announced a hunger strike in front of its offices at HDC, and asked that the authorities not allow it at that location, but rather "at a place far away … where safety and security of HDC would not be affected," because of fears that the strike "may cause serious disturbance and obstruction in normal office functions" of HDC.⁴⁷⁰ The Superintendent of Police, who had been copied on the letter, forwarded it to the local police station.⁴⁷¹

240.

On 10 October 2012, HBT reported another incident to the police, in which its site office was surrounded and its office staff were threatened not to attempt again to open the office, with the threat reportedly repeated by phone by the Secretary of the INTTUC Union.⁴⁷² By the time a police officer arrived, he found no continuing agitation.⁴⁷³ HBT forwarded its latest police reports (FIRs) to the District Magistrate, insisting that "the police officials as well as the district administration is under an obligation under law to take emergent action..." to restore a safe working environment at the Berths.⁴⁷⁴ The Superintendent of Police, who had been copied on this package of letters, forwarded it to the local police station.⁴⁷⁵

241.

On 11 October 2012, HBT advised KoPT of the "further incidents of threat, intimidation, violence and damage to property that were perpetrated against the employees, personnel and property of HBT" on 8 October and 10 October 2012. It acknowledged that KoPT had written in the past to "the State Administration and functionaries" to appeal for assistance with law and order at HDC, but accused KoPT of not "following up with the said authorities and/or ensuring that the issuance of the said letters culminates into some concrete action to restore peace and normalcy at HDC." HBT also "den[ied] that the CISF has in any manner assisted HBT," and stated that "the mere placing of CISF personnel at HDC will not, in itself, assure the safety of HBT's personnel, more so when in the recent past, the said CISF personnel have … refrained from interfering and assisting … when such incidents have taken place." HBT stated that it had now "become impossible for us to undertake any cargo handling operations" at the Berths. HBT sent copies of this letter to the police and the District Magistrate, among others.⁴⁷⁶ It also wrote separately to the District Magistrate on 12 October 2012, summarizing the various incidents between 22 September and 10 October 2012, and again requesting assistance.⁴⁷⁷ On 12 October 2012, KoPT sent a report to the Government of West Bengal "on the prevailing situation … and steps taken so far,"⁴⁷⁸ with a request "for its intervention on labour welfare and other related local issues."⁴⁷⁹

242.

On 12 October 2012, KoPT advised HBT that it must resume cargo operations by 19 October 2012, "failing which it would be presumed that HBT is not interested in continuing the work."⁴⁸⁰ On 16 October 2012, HBT reported to the police, with a copy inter alia to KoPT and the District Magistrate, that its staff had been "trying to enter the port to report to duty … and attempt to resume our operations," but were receiving "intimidating calls from unknown numbers" and had been told that groups were convened near various HDC entrances, with the result that "[n]aturally our staff is scared to face the group and enter the HDC port area."⁴⁸¹ The Superintendent of Police forwarded this letter to the local police, as with all the other letters he had received from HBT and KoPT.⁴⁸²

243.

On 16 October 2012, HBT filed a Writ Petition in the Calcutta High Court, seeking an order of police protection.⁴⁸³ In response to a court order, the Haldia police submitted a report describing its response to various complaints HBT had filed, from the date of HBT's retrenchment of workers (24 September 2012) through 10 October 2012. In general, the report stated that there had been "peaceful agitation" by union members in the wake of the retrenchment, but that "[t]hough Police was deployed from Haldia [police station] time to time … no major untoward incident related to break down of law and order in and around HDC was reported … till today." The report concluded that "it is basically a labour dispute … and Law and Order situation is over all peaceful," and claimed that the "[s]ituation is kept under continuous sharp vigil by introducing Police Pickets and patrolling in an[d] around the HDC."⁴⁸⁴ The Superintendent of Police submitted a separate report regarding HBT's letter of 12 October 2012, stating that based on the report he had received from the local Haldia police, "it is revealed that all necessary actions as per law have been taken by Police," that "no such major incident has happened or reported on last two months" at HDC, and that "[s]ufficient Police personnel have been deployed …."⁴⁸⁵ The District Magistrate, in turn, reportedly claimed that the situation around HDC had not taken any turn for the worse as a result of the retrenchment.⁴⁸⁶ HBT contended that the police and District Magistrate had never responded to any of their complaints, not even to contend that their allegations were without basis, but that KoPT for its part had "openly supported the cause of the petitioners."⁴⁸⁷

244.

The Calcutta High Court expressed deep concern that local authorities had never apprised HBT of the results of their investigations (namely that HBT's allegations purportedly were "incorrect, baseless and unfounded"), stating that this "utter apathy" "shocks the conscience of the Court …."⁴⁸⁸ The Court noted that the Superintendent "accepts, prima facie, [that] a labour dispute exists," and the District Magistrate's contention that "no untoward incident has occurred yet" appeared based on limited information provided, without any personal visit to HDC.⁴⁸⁹ The Court noted that the Superintendent's report made no reference to any visit on his part to HDC, but simply relied on the local police inspector, whose own report referenced no personal visits to HDC.⁴⁹⁰ "This being the state of affairs,'" the Court concluded, "it is difficult … to accept that the situation at berths 2 and 8 are absolutely normal, not warranting any order on the local administration." The Court made no findings about the "motives" of any individuals possibly seeking to disrupt cargo operations, but considered it necessary to issue interim directions, given the apparent "[l]ack of initiative" on the part of senior police officials "to gain first hand knowledge of the situation," and the public interest in resuming cargo operations.⁴⁹¹ The Calcutta High Court accordingly issued an interim order directing the District Magistrate and the Superintendent of Police "to ensure that disruptive activities, if any … does not hinder cargo handling operations at berths 2 and 8." This was to be accomplished through the deployment of "temporary police guards" at HBT's own expense, with the number of such guards to be assessed by the Superintendent. The retrenched workers and union representatives were to locate any demonstrations at least 100 meters from the HDC entry gate, and police were to prevent any unauthorized persons from accessing the Berths.⁴⁹²

245.

It took some time for the mechanism the Calcutta High Court had ordered to be put in place. On 20 October 2012, the Superintendent of Police asked HBT to notify the local police of its "specific requirement" for the placement of police guards at specific locations, who would be deployed "after due assessment and [HBT's] depositing Police Cost … to comply with" the Court's order.⁴⁹³ The local police similarly asked HBT to identify the locations where it needed guards, the time periods of guard duty, and how many days the guards would be required, so the relevant costs could be calculated.⁴⁹⁴ HBT responded that it did not have the expertise to dictate the details of the security arrangements, nor had the Court imposed this obligation on HBT.⁴⁹⁵ On 21 October 2012, the local police therefore submitted their own suggested deployment plan to the Superintendent, "after jointly visiting the operational area" with HBT, and asked the Superintendent to calculate the costs so HBT could submit payment and arrangements could be put in place.⁴⁹⁶ These costs (for a 30 day posting) were transmitted to HBT on 22 October 2012, and HBT responded that it preferred to arrange help initially for only ten days. It appears that HBT ultimately deposited the costs on 26 October 2012,⁴⁹⁷ and HBT was informed the next day that the guards were being mobilized to take up their posts at HDC beginning on the morning of 28 October 2012.⁴⁹⁸ KoPT's records and police logs suggest the deployment actually began on the evening of 27 October 2012.⁴⁹⁹ In the interim between 20-27 October 2012, while the placement of guards at fixed locations was still under discussion, the local police stepped up their periodic mobile patrols of the Berths, as reflected in numerous daily reports in the Haldia police duty logs.⁵⁰⁰

246.

However, while these arrangements were being put in place within the HDC complex, there apparently were additional incidents outside the complex. On 23 October 2012, HBT filed two police reports, the first stating that on the previous evening one of its employees had been attacked and severely injured by a mob of over 100 people,⁵⁰¹ and the other stating without details that an employee had been threatened not to enter the port.⁵⁰²

247.

Late in the night of 27-28 October 2012, just as the police guards were being posted at the designated spots within HDC, a further, far more serious incident occurred in a residential area roughly 3.5 kilometers away from the complex. LDA presented a witness statement from Mr. Jolly discussing these events, but by the time of the hearings he was no longer in HBT's employ,⁵⁰³ and Mr. Jolly did not appear for cross-examination despite being called to do so. As noted in Section IV.H above, the Tribunal declined to exclude his statement in toto, stating that it would apportion only such weight to its various assertions as it considered appropriate in the circumstances.⁵⁰⁴ The Tribunal considers that for the most part, the basic story Mr. Jolly recounted in his witness statement was consistent with more contemporaneous descriptions of these events. However, precisely because of the existence of contemporaneous documents, the Tribunal has no need to rely on Mr. Jolly's witness statement, for the purposes of the chronology of events described in detail below.

248.

At the time of these events, it appears that all was quiet at the Berths, which were being monitored by the police.⁵⁰⁵ However, based on contemporaneous police logs of the night, the local police received a telephone call from Mr. Jolly at 11:15 p.m., reporting persons loitering in and around a residential building in Haldia Township where he and another HBT colleague (Mr. Jagdish Behara) were visiting a third (Mr. Bhushan Patil); an officer was instructed to investigate.⁵⁰⁶ That officer subsequently reported that he had arrived at the building within ten minutes of Mr. Jolly's call and remained there from 11:25 p.m. through 12:35 a.m., but "did not notice any suspicious person there." Both Mr. Patil and the caretaker of the housing complex nonetheless confirmed to the officer that five or six people had gathered there for a time but subsequently left, and the officer eventually moved onto other patrolling duty, after leaving his mobile phone number with Mr. Patil.⁵⁰⁷ However, the police thereafter received an additional text and call reporting that "a chaos is going on in and around" Mr. Patil's residential complex, and the inspector in charge organized a force to accompany him to the site, in the meantime receiving an additional text from Mr. Jolly's phone (at around 1:10 a.m.) stating that "some had kidnapped their AGM," Mr. Patil.⁵⁰⁸ The police arrived on scene at 1:30 a.m. but could not find the HBT officials, nor any "outsider or any gathering," nor could they reach Mr. Jolly by phone. The officers then went to the hotel at which they learned Mr. Jolly had been staying, and discovered that he had checked out at 1:20 a.m., with the hotel manager stating that Mr. Jolly was unaccompanied at the time. The police subsequently received a text from Mr. Patil that "[a]ll is fine we are going from Haldia by our wish," but the inspector in charge nonetheless asked one of his officers to maintain watch around the residential complex.⁵⁰⁹ The police logs do not show any other relevant entry until 2:05 p.m., when they received an FIR from HBT stating that its officers had been abducted and forced to leave town.⁵¹⁰

249.

Other contemporaneous documents provide further details from the perspective of HBT. On the afternoon of 28 October 2012, HBT filed a report with the police stating that three of its senior officers (Messrs. Jolly, Behara and Patil, along with Mr. Patil's family members) "were abducted this morning" at about 1:00 a.m. from a residential address, "by a mob of about 50 unidentified persons, threatened with dire consequences and grievous bodily harm and were forced to flee Haldia at Gunpoint," having been advised never to "set foot in Haldia again."⁵¹¹ This HBT report was supported by several internal HBT communications during the events in question. First, at 00:56 a.m., Mr. Jolly e-mailed HBT's CEO to say that at around 11:00 p.m. on 27 October 2012, he had observed a group of 25-30 men approaching the premises "wearing mufflers and monkey caps," and he called the police moments later, being told that a mobile patrolling van "shall be coming in few minutes." The van reportedly arrived at around 11:35 p.m., and the police officer reported to Mr. Jolly by phone that nobody appeared to be present, even though Mr. Jolly could still see "few people … at a distance in a group from our windows." However, "[a]t exactly midnight the[re] was heavy banging on the door and … calling our names. They were trying to break open the door." Mr. Jolly called the police again, "asking them to resend the patrol van," and was told that the officer was on the way back. Mr. Jolly reported that "[w]ith this volatile situation and threat … our intention is to leave Haldia now."⁵¹² About half an hour later, at 1:32 a.m., HBT's CEO received a text message saying "PL CALL ME," and then a further text at 1:56 a.m., reporting that "JOLLY BUSHAN JAGDISH kidnap fr house."⁵¹³

250.

The HBT officers provided written statements two days later, on 30 October 2012. According to Mr. Jolly's contemporaneous statement, after the initial midnight knocking on Mr. Patil's door described above, the "mob … left the apartment complex" for a while, but returned around 12:55 a.m. "armed with sledge hammers," broke into Mr Patil's flat and pulled him out. Mr. Jolly states that he both called and texted the police to report these events. Shortly thereafter, the others left the flat after being "asked to come down," were put in a vehicle and were told they would be "taken away from there." Mr. Jolly requested and was allowed first to collect his luggage and check out from his hotel. The group was then driven away – Mr. Jolly observed that "the abductor sitting next to the … driver" had two hand guns –and were taken to the railway station, where "[t]he abductors … purchased tickets" for another town and waited on the platform until the group boarded the train. Mr. Jolly was forced to send a text to the police that all was well and they were leaving town on their own accord.⁵¹⁴ Mr. Behara's and Mr. Patil's statements of 30 October 2012 described the events of that evening similarly.⁵¹⁵

251.

The police opened an investigation into the incident. In addition to taking statements from the HBT officers, the investigation reportedly included examining "a good number of witnesses" and requesting a forensics examination of the place of occurrence.⁵¹⁶ India's evidence is that "[d]uring the investigation, the victims in their statement corroborated the allegations made in the FIR but none could identify a single accused person involved. Extensive attempts are being made to find out the miscreants through different sources."⁵¹⁷

252.

Three days after the incident, on 31 October 2012, HBT issued a letter to KoPT announcing its termination of the Contract ("Notice of Termination"). HBT observed that following the 12 September 2012 Consent Order ("based on which HBT agreed not to suspend cargo handling operations"), KoPT "took about 7 … days" to allocate work to HBT, and then failed to provide security to HBT's personnel and property, despite being contractually responsible for "general security to the entire Dock area" and "being well aware that … vested interests would take the law into their own hands and would disrupt operations …."⁵¹⁸ HBT complained that KoPT "refused to provide security" itself and instead asked HBT to request security from the relevant district authorities, which HBT characterized as a breach of its Contract obligations.⁵¹⁹ After HBT obtained the 19 October 2012 Calcutta High Court order of protection, KoPT "has not taken any pro-active steps" to assist, but simply "address[ed] a few token letters to relevant district functionaries," while continuing to pressure HBT to resume work by placing vessels at the Berths before HBT was ready to handle them.⁵²⁰ HBT characterized the events of 27-28 October 2012 as its final breaking point, through which "the law and order situation has now extended beyond the premises of HDC and perpetuated [sic] the homes of our officers/employees." HBT contended that "[t]he persons who are responsible … are under the control of KoPT," and "by being a mere silently [sic] spectator to all such acts of violence against HBT, KoPT is guilty of aiding and abetting such illegal acts."⁵²¹ HBT concluded that "it now appears that KoPT had no intention whatsoever of enabling and/or permitting HBT to obtain the benefit of the [Consent Order] and the entire exercise was nothing but a charade,"⁵²² in which "KoPT was acting solely at the behest of vested interest and had been doing so all along."⁵²³ HBT also accused KoPT of "suppress[ing] … from the intending bidders" for the Tender KoPT's awareness that mechanizing the Berths and prioritizing cargo to mechanized berths would lead to resistance.⁵²⁴ In view of these "fundamental breaches," HBT stated that KoPT "has thereby repudiated its contractual obligations and HBT is therefore, discharged from its obligations arising under the [Contract]."⁵²⁵ It asked KoPT to protect HBT's equipment until it could be removed from HDC.⁵²⁶

253.

On 3 November 2012, HBT informed KoPT of the retrenchment of its remaining 341 employees with immediate effect.⁵²⁷

254.

Following HBT's withdrawal, uncertainty continued over the fate of the equipment remaining at the Berths.

255.

First, on 7 December 2012, KoPT petitioned the Calcutta High Court for an interim injunction against the removal of the equipment, claiming a lien in light of damages attributable to HBT's alleged repudiation of the Contract.⁵²⁸ On 13 December 2012, the Court found that "[o]n the facts as evident at present, [HBT] cannot be burdened by curbing its unfettered right to use and deploy its machinery, equipment and material," as "nothing in the [Contract] gives the Port any lien over or right to withhold the … equipment" and, at least on a prima facie basis, "it does not appear that [HBT] chose to abandon the work or the site without any justification," given the continued law and order situation. The Court appointed Special Officers to oversee the removal of the equipment.⁵²⁹ This interim order was subsequently modified to permit HBT to use its equipment freely within the country upon notice to the Special Officers, but with the Special Officers remaining in symbolic possession thereof pending final resolution on the merits of the HBT-KoPT contractual dispute.⁵³⁰

256.

Shortly thereafter, on 26 December 2012, the Office of the Commissioner of Customs ("Customs Authority") sought payment of a duty it contended would be due prior to any removal of the equipment, in light of HBT's original duty-free import of the equipment under the "Export Promotion Capital Goods" ("EPCG") licensing scheme.⁵³¹ On 2 January 2013, the Customs Authority asked KoPT to take action to ensure that HBT's imported equipment was not removed from the Port pending resolution of the issue.⁵³² On 16 January 2013, KoPT apparently filed an application seeking to bar removal of the equipment on the grounds that the Customs Authority had a claim over such equipment,⁵³³ and on 13 February 2013 the Calcutta High Court directed that the equipment be moved to an alternate site within HDC.⁵³⁴ This process was completed by early March 2013, when cargo handling operations by manual means were resumed at Berth Nos. 2 and 8.⁵³⁵ On 14 March 2013, the relevant authorities confirmed that HBT had discharged its export obligations under the EPCG license.⁵³⁶

257.

Meanwhile, however, KoPT had continued to press its application for an injunction against HBT's removing the equipment from HDC pending final judgment on the merits of a contractual dispute, which by then had been submitted to domestic commercial arbitration. On 22 March 2013, the Calcutta High Court rejected the application,⁵³⁷ finding –as it had at the earlier interim injunction stage –that KoPT had not established a basis for a lien. Among other things, the Court observed as follows:

On the basis of the material now available, it cannot be accepted that merely commercial reasons prompted [HBT] to abandon the agreement. … While there is no evidence of the Port's complicity with the vested interests at [HDC], it is equally unfair of the Port to foist the blame on [HBT] and charge it with abandoning the work, unmindful of the impediments in the way of [HBT] that the Port admitted in its letters to third parties. … [I]t seems that [HBT] was hounded out of Haldia and, given the law and order situation and the apathy of the administration to address the same, it was left with no alternative but to terminate the agreement. …

[HBT] is entitled to remove its machinery and equipment from [HBC], subject, however, to any customs or like claim in respect thereof.⁵³⁸

258.

Following KoPT's appeal against this decision, the Calcutta High Court Division Bench issued an amended ruling dated 14 May 2013, in which it allowed HBT to use the equipment anywhere within the country, but enjoined HBT from disposing of it without prior leave from a commercial arbitration tribunal empowered to hear Contract disputes between HBT and KoPT.⁵³⁹ The Indian Supreme Court upheld that decision on 19 July 2013.⁵⁴⁰ On7 October 2013, HBT asked the commercial arbitration tribunal for an interim order permitting it to sell the equipment or remove it from the country.⁵⁴¹ On 13 June 2014, the arbitral tribunal authorized HBT to sell its equipment only if it first made a deposit of the equipment's assessed value.⁵⁴²

259.

While the commercial arbitral tribunal was considering these issues as between HBT and KoPT, the customs dispute also continued in the local courts. On 26 November 2013, the Calcutta High Court determined that "the customs authorities cannot have any duty claim" against HBT, and therefore certain HBT bank guarantees with Axis Bank could be cancelled.⁵⁴³ Axis Bank accordingly released and discharged the bank guarantees.⁵⁴⁴ The Customs Authority appealed against the 26 November 2013 order, and on 25 March 2014 they issued a notice requesting HBT to show cause why its equipment should not be confiscated under the Indian customs legislation.⁵⁴⁵ HBT filed a contempt of court petition before the Calcutta High Court, which was resolved by interim order in HBT's favor.⁵⁴⁶ The interim order was subsequently directed to be held in abeyance pending resolution of the Customs Authority's appeal against the 26 November 2013 order,⁵⁴⁷ and on 29 April 2014, the Calcutta High Court Division Bench ruled in favor of the Customs Authority, allowing it to proceed against HBT in accordance with the law.⁵⁴⁸ HBT appealed to the Indian Supreme Court, which on 24 February 2015 declined to interfere with the pending Customs proceedings.⁵⁴⁹ The Customs Authority thereafter completed its examination, finding in March 2016 that HBT in fact had complied with its export obligations under the EPCG license, and dropped its proceedings against HBT.⁵⁵⁰

260.

As of March 2015, when LDA submitted its initial witness statements, its evidence was that HBT had been able to remove from HDC 25 of its total 50 dumpers and one pay-loader of its 24, along with all of its computers and records. However, on an unspecified date, HBT was reportedly told that "the labour unions had issued a diktat forbidding workers from assisting HBT," in consequence of which "[t]he remaining equipment is still lying idle and unused at HDC."⁵⁵¹ ABG Infra's Managing Director, Mr. Agarwal, contends that ALBA otherwise could have monetized HBT's Mobile Harbor Cranes by hiring them out to other port trusts in connection with various tenders issued in 2016.⁵⁵²

261.

It is not clear when and in what manner HBT last attempted to retrieve the equipment from the site. LDA's position is that HBT is still effectively blocked from retrieving the equipment.⁵⁵³ India's position is that HBT has not paid the deposit of the value of the equipment that the domestic arbitration tribunal found was necessary before HBT could move the equipment out of Haldia.⁵⁵⁴

262.

Separate from the dispute over HBT's access to its equipment, there was an additional dispute regarding HBT's eligibility for further contracts with KoPT. On 28 November 2012, KoPT issued a "Show Cause Notice" indicating that an enquiry had been initiated into HBT's eligibility and requesting HBT to show cause "as to why it should not be banned from having any further business dealings and transactions with KoPT …."⁵⁵⁵ On 11 December 2012, HBT replied that the "show cause notice" was "manifestly wrongful, illegal," and in bad faith.⁵⁵⁶ HBT sought an injunction, but on 19 December 2012, the Calcutta High Court refused this request, directing HBT to "await the outcome of the process kicked off by the show cause notice."⁵⁵⁷ The Calcutta High Court later rejected a further HBT application to adjourn the enquiry proceedings.⁵⁵⁸ The enquiry therefore proceeded, with LDA now contending that the Enquiry Officer committed numerous due process errors, including denying HBT an opportunity to submit key documents and denying its right to an independent and impartial tribunal and to a reasoned decision.⁵⁵⁹

263.

On 7 May 2014, KoPT's Enquiry Officer submitted his report,⁵⁶⁰ concluding that HBT was not justified in terminating the Contract and recommending that HBT be blacklisted from future KoPT contracts.⁵⁶¹ On 16 May 2014 KoPT wrote to MoS, suggesting that "since this is an important issue affecting/likely to affect various Ports across India it is felt that such order for banning of business dealing of HBT may be issued by the Ministry of Shipping" rather than KoPT, and that "[t]he Ministry may also consider banning of business dealing of constituent companies of HBT as well as its group companies with the Ports in view of the extremely adverse report of the Enquiry Officer against HBT."⁵⁶² On 30 May 2014, the MoS replied that "the subject matter of the Enquiry … are specific to a particular project" involving HBT, and that KoPT should take "necessary action … to ban business dealings of HBT."⁵⁶³ On 16 June 2014, KoPT issued an order banning HBT from "any future business dealings and transactions with KoPT" for five years (the "Blacklisting Order").⁵⁶⁴ On 24 September 2014, HBT challenged the Blacklisting Order before the Calcutta High Court.⁵⁶⁵ On 14 March 2015, KoPT informed all the other major ports in India of its decision to ban HBT from dealings with KoPT for five years.⁵⁶⁶ On 4 April 2017, HBT withdrew its pending court petition challenging the Blacklisting Order.⁵⁶⁷

264.

In the wake of the Blacklisting Order, LDA and ABG Infra have continued to collaborate through ALBA on other projects in India, based on concessions awarded prior to the Blacklisting Order.⁵⁶⁸ ALBA apparently also was declared the leading bidder in two 2016 tenders issued by Port Trusts other than KoPT.⁵⁶⁹ ABG Infra's Managing Director contends, however, that the Blacklisting Order "damaged the future prospects" of various ABG companies, namely ABG Kolkata, ABG Infra and ABG Ports.⁵⁷⁰

265.

Concurrent with the Calcutta High Court proceedings and the KoPT Enquiry Officer proceedings, the MoS constituted its own fact-finding team to determine the circumstances that had precipitated the crisis at HDC. On 26 November 2012, it issued an interim report, concluding that "[p]rima facie, it appears that the withdrawal of HBT was on account of" five separate factors, including (a) HBT's continuing losses attributable to declining cargo due to overall trends and HBT's aggressive bidding that was financially not viable without high cargo volumes; (b) "lost interest in continuing with the loss-making venture" by HBT's shareholders, following a change in the shareholding pattern of the original bidding consortium; (c) excess labor burdens, "which prima facie appears to have been propelled by political considerations"; (d) "Covert and Overt labour unrest"; and (e) "[l]aw and order issues which occurred outside the dock area" and HBT's "loss of confidence... in the State Authorities …."⁵⁷¹ The interim report identified as a "contributory factor" that the "business model" of the Contract was "against the interest of the existing parties which had a near monopoly on the on-shore cargo operations."⁵⁷²

266.

On 23 April 2013, the MoS fact-finding committee issued its final report, adopting the findings of the interim report and recommending measures to prevent a recurrence in the future.⁵⁷³

267.

The process of replacing HBT, and getting the Berths back into operations, was neither smooth nor quick. In the near-term, KoPT contracted with another company to evacuate the cargo that remained un-cleared at the Berths following HBT's termination.⁵⁷⁴ KoPT ultimately engaged in six rounds of tendering for the further equipping of Berth Nos. 2 and 8,⁵⁷⁵ beginning with a tender on 9 November 2012.⁵⁷⁶ This tender was subsequently discharged, and on 2 April 2013, KoPT floated a second tender.⁵⁷⁷ In the interim, in the beginning of March 2013, KoPT resumed cargo handling by manual means at the Berths,⁵⁷⁸ following a period of many months in which the Berths were essentially idle. This tender was also ultimately discharged, and on 2 December 2013 KoPT floated a third tender for the Berths.⁵⁷⁹ The third tender was likewise discharged, and on 22 January 2015, KoPT floated a fourth round of tenders for the Berths, this time with two separate tenders for mechanized handling of cargo onboard the vessels and non-mechanized shore handling operations.⁵⁸⁰ The fourth round was discharged, and on 11 March 2015, KoPT floated a fifth round of tenders, again separated into separate components for mechanized on-board handling and non-mechanized shore handling.⁵⁸¹ Both components ultimately required a sixth round of tendering, with contracts finally being awarded (a) in June 2015 for the onboard operations, to Bothra Shipping Services Pvt. Ltd. for Berth No. 2, and a consortium comprised of Orissa Stevedores Limited (as "Lead Member") and Ripley for Berth No. 8,⁵⁸² and (b) in February 2016 for the shore handling operations, to Ripley at both Berths, on account of its being the lowest approved bidder.⁵⁸³

268.

LDA maintains that the results of these tenders supports its theory that the "Vested Interests" (as it defines the term) all along were acting in consort to benefit Ripley.⁵⁸⁴ India denies the allegation and emphasizes that Ripley prevailed in a competitive bidding process.⁵⁸⁵

269.

As noted, HBT and KoPT continue as parties to a commercial arbitration empanelled under the arbitration clause of the Contract. It appears that arbitration is still proceeding, with periodic hearings for the examination of witnesses, but no clear timetable for its completion.⁵⁸⁶

270.

On 11 November 2013, LDA served India with its formal Notification of Claim invoking arbitration under Article 9 of the France-India BIT (the "Notification of Claim").⁵⁸⁷ This was followed on 31 March 2014 by LDA's Notice of Arbitration, commencing the present proceedings.⁵⁸⁸

271.

On 17 June 2014, KoPT approached the Calcutta High Court seeking an anti-arbitration injunction to restrain LDA from proceeding against KoPT under the France-India BIT,⁵⁸⁹ on the basis of the Contract's arbitration clause and the pending domestic arbitration between HBT and KoPT under that Contract clause.⁵⁹⁰ On 8 August 2014, in response to LDA's request that the PCA appoint the second arbitrator in these proceedings, India informed the PCA that the Calcutta High Court had stated that any steps taken by LDA in these proceedings would be subject to its orders and that any arbitral tribunal constituted under the France-India BIT should be approached for an adjournment. India suggested that the PCA therefore reject LDA's application, "having regard to the principles of Comity of courts exercising jurisdiction in respect of the same subject matter …." At the same time, India indicated its appointment of Mr. Thomas QC as second arbitrator,⁵⁹¹ which LDA opposed. On 29 September 2014, the Calcutta High Court issued an order restraining LDA from pursuing BIT claims against KoPT, but allowing LDA to pursue BIT claims against India.⁵⁹² The Calcutta High Court concluded that:

The bilateral treaty is between the two sovereign nations. An investor under the treaty has been given certain special rights and privileges which is enforceable under the treaty. Whether the notification of claim falls within such parameters and [LDA] could be treated as an investor is a matter to be decided by the arbitral tribunal duly constituted under the relevant rules. In the event, the preliminary objections are overruled and the arbitral tribunal is of the opinion that the matter can proceed and continuation of such proceeding would not be a recipe for confusion and injustice. …

The Union of India would be required to contest the matter on merits….

The arbitration agreement is only enforceable against the Union of India and not against KOPT. The continuation of any proceeding against KOPT at the instance of [LDA] would be oppressive for the reasons mentioned above. In view thereof KOPT would not be bound to participate in the said proceeding.…

[LDA] is restrained from proceeding with the arbitral proceeding only against the petitioner [KoPT].⁵⁹³

272.

As noted in Section V.B, India disputes that the Tribunal has jurisdiction over LDA's claims and that the claims are admissible. India's jurisdiction and admissibility objections may be summarized by reference to the subheadings in Section III of its Counter-Memorial, which contend that:

A. Even As Reformulated (Twice), Claimant's Claims Remain Premised On Treatment of HBT And, As A Result, The Tribunal Has No Jurisdiction Over Them [;]

B. Claimant's Investment In The Project, Through ALBA, Was Premised On Fraudulent Misrepresentations And, As A Result, Claimant's Claims Must Be Dismissed [;]

C. The Conduct Of KoPT And The So-Called "Vested Interests" Is Not Attributable To The State of India [;]

D. Alternatively, LDA's Claims Should Be Dismissed Because The Parties And The Claims Under The Present Proceedings And The Domestic Arbitration Are Substantially The Same And There Would Be No Material Prejudice Resulting to Claimant From Continuance Of Proceedings In The Ongoing Arbitration Under The Contract Between KOPT And HBT [;]

E. Even If KoPT's Actions Are Attributable To India, LDA's Claims Based Upon Disputes Resolved As Between HBT and KoPT By The Settlement Recorded In The Consent Order Of the Calcutta High Court Are Inadmissible And Outside The Tribunal's Jurisdiction [;]

F. The Tribunal Lacks Jurisdiction Over LDA's Claims Of Treaty Breach And Loss Allegedly Occurring Before LDA Made Its Investment In India [; and]

G. The Tribunal Lacks Jurisdiction Over Any LDA Claims Based Upon Actions Or Omissions That Occurred Before India Acquired Knowledge of Claimant's Shareholding In HBT.⁵⁹⁴

273.

LDA by contrast considers that it has made a protected investment under the France-India BIT and that its claims in this case relate to treatment by India of that qualifying investment. It also denies each of India's further objections to the Tribunal's jurisdiction. LDA's responses may be summarized by reference to the corresponding subheadings in Section XII of its Reply, which contend that:

A. The Respondent's Submissions on Reflective Loss are Without Merit [;]

B. Claimant's Investment was not Based on Fraudulent Misrepresentation [;]

C. The Claimant's Investment did not Violate Section 108A of the Companies Act [;]

D. The Conduct of KoPT is Attributable to the Respondent as a Matter of International Law [;]

E. The Claimant's Claims Are Not Excluded by Reason of Lis Pendens [;]

F. Consent Order is Not Determinative of the Present Disputes [;]

G. The Respondent's Ratione Temporis Argument does not deprive the Tribunal of Jurisdiction over its Claims [; and]

H. Knowledge of Investment is not a Prerequisite for Raising a Claim under the Treaty.⁵⁹⁵

274.

The Parties have briefed each of these objections extensively. The Tribunal believes it appropriate to start with India's first objection, which is closely connected to the Tribunal's prior Decision on Jurisdiction. In particular, the Tribunal focuses below on the implications of Article 2(1)'s exclusion of certain indirect investments from coverage, in light of LDA's reformulation of its claims and the facts as the Tribunal has now found them in Section VI above.

275.

Before beginning this Article 2(1) analysis, the Tribunal acknowledges that India has presented a far broader objection to the formulation of LDA's claims: that LDA would have no standing to proceed even absent Article 2(1), because the Treaty allegedly does not permit investors to bring so-called "reflective loss" claims – i.e., claims for harm to the value of their shares in companies allegedly mistreated, without any alleged mistreatment of the investors' shareholder rights as such. India relies on the Barcelona Traction case to argue that reflective loss claims are barred by customary international law absent specific treaty authorization, which it finds lacking in the France-India BIT.⁵⁹⁶ India also argues that even if the Treaty might permit some reflective loss claims, this could not extend to so-called "double reflective loss" claims, in which standing is purportedly not on mistreatment of the company in which the investor holds shares, but rather mistreatment of a further (downstream) company in which the investor holds no shares.⁵⁹⁷ India acknowledges that its first argument – against "reflective loss" claims as such – runs counter to the decisions of a number of other investment treaty tribunals;⁵⁹⁸ it characterizes its second argument as addressing a "radical and unprecedented" type of claim presented in this case.⁵⁹⁹

276.

For its part, LDA characterizes these objections as an attempt to "deny[] protection to the actual investors, and negate[] their rights and remedies under the Treaty."⁶⁰⁰ LDA considers the general issue of reflective loss claims under investment treaties to be well settled, and finds no basis for limiting the concept of traceable harm to share value to a single level of shareholding.⁶⁰¹ LDA does acknowledge the unusual nature of its "double reflective loss" claim formulation, but explains this as a function of its unusual need (in light of Article 2(1)) to frame its claims not about its indirect investment in HBT as such.⁶⁰²

277.

While the Tribunal considers the reflective loss arguments of both Parties to be interesting, it is unnecessary ultimately for it to wade into these broader doctrinal debates. Indeed, India itself acknowledges that "the Tribunal does not need to decide the admissibility of shareholder claims for ordinary 'reflective loss,' or even for the 'double reflective loss' claimed here by LDA," in light of its continuing objection to LDA's claim reformulation under Article 2(1).⁶⁰³ The Tribunal agrees with this logical order of analysis. For the reasons discussed in this Section, it finds that Article 2(1)'s unusual express exclusion of protection for indirect investments made with a minority ownership in the intermediate investment vehicle continues to impose significant special hurdles for LDA's case, which involves just such an ownership structure with respect to HBT. Ultimately, as discussed in the following Section VII.B, the Tribunal finds that LDA has not met its burden of proof with respect to these special hurdles. In these circumstances, it is not necessary to resolve India's other bases for challenging jurisdiction in this case.

278.

As already noted above, Article 2(1) of the France-India BIT provides:

[The BIT] shall apply to any investment made by investors of either Contracting Party in the area of the other Contracting Party, including an indirect investment made through another company, wherever located, which is owned to an extent of at least 51 per cent by such investors, whether made before or after the coming into force of this Agreement. (emphasis added)

279.

LDA's original Statement of Claim sought a monetary award for the "full market value of the Contract" between HBT and KoPT,⁶⁰⁴ based on the following characterization of LDA's relevant "Investment":

[T]hrough its shareholding, the Claimant holds partial rights (in the ratio 49:51 …) to money and claims to performance under the Contract. Consequently, the Claimant's indirect shareholding of, and rights in the Contract held by, HBT qualify as a protected investment in India, as that term is defined in the Treaty (the 'Investment'). Thus, any damage caused to or loss suffered by HBT is also a loss of damage to the Claimant's Investment.⁶⁰⁵

LDA claimed that India was responsible for "a series of targeted actions … aimed at dispossessing the Claimant of its Investment," as defined above.⁶⁰⁶

280.

As noted above, India sought and was granted bifurcation (inter alia) of its original "Second Objection" to jurisdiction, which was that the Tribunal lacked jurisdiction pursuant to Article 2(1) of the Treaty because LDA's defined "Investment" (its shares in HBT and/or its asserted derivative rights in HBT's Contract) was made indirectly through a company (ALBA) of which LDA owned less than 51%.⁶⁰⁷ During the briefing and argument of this bifurcated objection, LDA defended its original framing of the qualifying indirect investment, but it also argued that it could have framed its case alternatively in a way that would obviate the Second Objection. Specifically, LDA emphasized that it had two forms of qualifying direct investments in India, the first through its direct shareholding interest in ALBA, and the second through its commitment of finance, personnel and know-how directly to HBT.⁶⁰⁸

281.

The Tribunal's Decision on Jurisdiction accepted India's Second Objection with regard to LDA's original framing of its case. Specifically, the Tribunal reasoned as follows:

• "The fact that a particular asset falls within the definition of the term 'investment' [in Article 1(1) of the Treaty] does not necessarily mean that it is a protected investment. States are free, if they wish, to extend treaty protection to a subset, rather than to the full universe of potential investments."⁶⁰⁹

• Article 2(1) "restricts the scope of Treaty protections to indirect investments in which an investor from the other Contracting Party owns at least 51% of the intermediate investment vehicle, wherever that vehicle may be located"⁶¹⁰ –and accordingly, "by virtue of Article 2(1), the Claimant may not proceed under the BIT with a claim for harm to its indirect investment in HBT."⁶¹¹

• The MFN clause in the Treaty could not "be used to overcome express limits to the threshold scope of the BIT itself, and thus to expand its jurisdiction ratione materiae," because Article 2 "functions as a gateway. Only investors and investments that are entitled to pass through that gateway may then invoke the protections of the Treaty's other provisions," including the MFN clause itself.⁶¹²

• For these reasons, LDA's "indirect investment in HBT does not fall within the scope of covered investments, because the Claimant chose to make that investment through an intermediate entity (ALBA) in which it held less than 51% of the shares. Had the Claimant negotiated a different arrangement with its joint venture partner, so the Claimant maintained 51% rather than 49% of the ALBA shares, then the investment structure would not have fallen afoul of the restriction in Article 2(1)."⁶¹³

282.

The Tribunal next analyzed "whether the Second Objection disposes in its entirety of the Claimant's case, or whether a portion of that case may proceed on a basis other than with respect to the Claimant's indirect investment in HBT."⁶¹⁴ The Tribunal noted LDA's claim that it had made two distinct direct investments in India that were implicated on the facts, one through its direct shareholding in ALBA and the other through a direct commitment of finance, personnel and know-how to HBT. Since the Parties agreed that the Treaty "imposes no majority ownership restriction on the BIT's coverage of direct investments," the Tribunal concluded that it was "common ground" that the Claimant would have standing to pursue a "properly framed claim for improper treatment of and injury to its direct investment" in India.⁶¹⁵

283.

With respect to a possible reformulation of LDA's claims, the Tribunal noted India's argument that LDA would have to allege wrongdoing that was "aimed at the Claimant's shareholding in ALBA itself," and not predicated simply on a derivative injury to ALBA flowing from "State action in relation to HBT, the indirect investment," since the latter would be "an impermissible end-run around Article 2(1)'s bar on asserting a claim squarely on the basis of the indirect investment in HBT."⁶¹⁶ The Tribunal stated that "[i]t agrees with the Respondent that no jurisdiction would lie for a direct investment claim that is simply a restatement of the indirect investment claim that is excluded from BIT protection under Article 2(1)."⁶¹⁷ The Tribunal then stated as follows:

In other words, in general the Claimant cannot collapse the distinction between the two types of claims by simply positing, with no economic analysis, that its 49% stake in ALBA entitles it automatically to claim for 49% of whatever injury may have been sustained by HBT. On the other hand, if the Claimant properly can frame an analytically distinct claim, focused on alleged wrongdoing by the Respondent that demonstrably injured the Claimant's interest in assets that it directly owns, such a claim in principle would not be barred under Article 2(1).⁶¹⁸

284.

The Tribunal rejected India's argument that it was too late in the proceedings for LDA to attempt to reformulate its claim in a way that might survive the exclusion in Article 2(1). The Tribunal observed that "[w]hile it is true that the Claimant's initial pleadings did not formulate the claim in this way, they did clearly allege the factual predicate of a direct investment in India. Moreover, the Claimant made clear immediately after the Respondent's request for bifurcation that it intended to proceed in the alternative on the basis of its direct investment, should the Tribunal find jurisdiction to be lacking over its indirect investment claim."⁶¹⁹ The Tribunal acknowledged that a prior investment arbitration tribunal facing a similar issue – in HICEE v. Slovakia – had denied an investor's request to re-plead claims in order to focus on a direct rather than indirect investment, on the basis that jurisdiction still would only lie if the claimant could demonstrate wrongful "treatment" of the direct investment itself, as opposed to simply mistreatment of the downstream indirect investment causing injury upstream to the direct investment.⁶²⁰ The Tribunal stated that it was not persuaded "at this point" to follow the HICEE approach of precluding a requested re-pleading altogether,⁶²¹ because it appeared that jurisdiction to hear any reformulated direct investment claim in this case might be closely intertwined with issues of fact.⁶²²

285.

"In these circumstances," the Tribunal explained, "it would be premature to preclude a direct investment claim at the outset, without further briefing on the facts (including as to which entity or entities the State action or 'treatment' in this case was directed), as well as on the proper boundaries between issues of loss causation and jurisdiction."⁶²³ The Tribunal emphasized that it was not deciding such jurisdictional issues now with respect to a reformulated direct investment claim, but rather was concluding that "claims alleging injury to such direct investments as a consequence of State conduct are not so manifestly flawed that they should be barred at the door, simply because the treaty excludes other types of claims alleging harm to certain categories of indirect investments."⁶²⁴ In addition to these areas of factual briefing which the Tribunal expressly stated could be relevant to its ultimate jurisdictional analysis, the Tribunal also cautioned that "there are significant differences (and arguably greater hurdles) in the way such a 'double reflective loss' claim would have to be proven" on the merits and quantum, "including inter alia with respect to issues of causation and loss."⁶²⁵

286.

With this guidance provided, the Tribunal permitted LDA, should it so wish, to file an Amended Statement of Claim. LDA did so on 17 February 2016.

287.

LDA's Amended Statement of Claim reflected a degree of reformulation from its initial Statement of Claim, but for the most part, the amendments related to the tracing of LDA's injury through ALBA, not an allegation that India's conduct allegedly was directed at ALBA or at LDA itself. For example, LDA added a passage stating that "[t]he destruction of HBT's assets had a substantial and detrimental impact on ALBA,"⁶²⁶ and replaced its initial request for an award for the "value of the Contract" with one for "the loss of the value of the Claimant's shareholding in ALBA which … was substantially eroded on account of the Respondent's violations of the Treaty."⁶²⁷ However, with respect to India's alleged misconduct, LDA still characterized this primarily as directed at HBT, complaining of "a series of targeted actions by State and non-state actors aimed at destroying HBT's operations."⁶²⁸ The closest LDA came to alleging mistreatment of ALBA as such were two revised sub-section captions: (a) the first replacing the earlier language, "KoPT's attempts to dispossess the Claimant of its equipment and property" with amended language, "KoPT's attempts to dispossess ALBA of its assets,"⁶²⁹ and (b) the second adding the words "ALBA's and" to the allegation that India "manipulated its administrative processes to damage [ALBA's and] the Claimant's future business prospects."⁶³⁰ The content of these sub-sections was otherwise unaltered, the first still discussing KoPT's attempts to claim a lien over HBT's equipment,⁶³¹ and the second still discussing KoPT's blacklisting of HBT from further dealings for five years.⁶³²

288.

LDA's additional amendments made clear that in its Amended Statement of Claim, it was not trying to plead actions by India directed towards ALBA as such, but rather that "the acts or measures directed by India at HBT are the focus of the section below on the breach of the Treaty,"⁶³³ on the theory that the resulting impact on share value upstream would be sufficient for jurisdictional purposes. LDA explained this theory as follows:

[T]he Claimant invested in India and any conduct of India affecting HBT's rights affects the Claimant's investment in the form of its shareholding in ALBA. And that is how the reference to 'investment' in the section on breaches should be read: although the actions are directed towards HBT, they are also actions against the investment of the Claimant in ALBA. It is these acts that form the claims for violation of the Treaty provisions in respect of expropriation, fair and equitable treatment, full protection and security and anti-discrimination.⁶³⁴

LDA characterized its subsequent task regarding quantum as follows: "[O]nce a violation is proven based on the acts directed against HBT, the Claimant must prove that these violations caused its shareholding in ALBA a loss."⁶³⁵

289.

As discussed in Section IV.E, India subsequently sought permission to file further jurisdictional objections and present a second bifurcation request, on the basis (inter alia) that LDA's Amended Statement of Claim still had not properly framed an analytically distinct claim focused on alleged wrongdoing by India towards any direct investment by LDA, as opposed to its unprotected indirect investment in HBT.⁶³⁶ In granting the requested permission, the Tribunal emphasized "first and foremost, that it has reached no conclusions, preliminary or otherwise, regarding the potential jurisdictional objections that the Respondent has signalled it intends to assert with regard to the Claimant's Amended Statement of Claim."⁶³⁷

290.

In its Second Bifurcation Request filed on 28 March 2016, along with its Second Counter-Memorial on Jurisdiction, India argued (inter alia) that LDA's reformulation was insufficient to overcome the obstacles to jurisdiction imposed by Article 2(1).⁶³⁸ LDA opposed bifurcation (inter alia) on the basis that the Tribunal purportedly had already decided that a reformulation along the lines it presented would comply with Article 2(1), and India's objection accordingly was precluded on the basis of res judicata.⁶³⁹ LDA also argued that its Amended Statement of Claim already reflected the "inescapable reality … that the actions and inactions of the Indian instrumentalities … were very obviously intended to drive out the Claimant and ABG Infra, the parties that were the known owners and drivers of the operation at HDC through ALBA," and that these upstream investors in HBT therefore were "the parties who were intended to, and did, feel most directly the consequences of the conduct" challenged in this case. LDA stated that in this sense, HBT "was no more than a proxy for the real targets : the Claimant and ABG Infra, through ALBA."⁶⁴⁰

291.

In its PO5, the Tribunal emphasized that contrary to LDA's res judicata contention, the Tribunal's "earlier Decision on Jurisdiction did not anticipatorily resolve all the issues raised in" India's renewed Article 2(1) objection.⁶⁴¹ Rather, while the Tribunal had permitted LDA an opportunity to amend its Statement of Claim to "reframe its case under one or both of" the alternate "direct investment" theories it had articulated at the jurisdictional hearing, the Tribunal "did not intend to rule anticipatorily on the adequacy … of any particular form of reframing the Claimant might choose to make."⁶⁴² Now that LDA had chosen to reformulate its claims entirely based on its status as a direct investor in ALBA, rather than as a direct investor (in different respects) into HBT itself, "[t]his repleading therefore squarely raises the issue of the circumstances in which" such a claim may proceed under the Treaty, notwithstanding the exclusion in Article 2(1). The Tribunal observed that "[g]iven the unusual nature of Article 2(1), the outcome of this analysis … is not dictated by prior jurisprudence."⁶⁴³

292.

However, the Tribunal denied India's Second Bifurcation Request to have such issues determined at a preliminary phase, prior to full presentation of the evidence. It explained it was "not convinced" that India's renewed objection based on Article 2(1) of the Treaty "can be decided simply as a matter of law, without grappling with the evidence regarding the challenged conduct and the considerations that drove that conduct."⁶⁴⁴ The Tribunal noted that LDA "now further contends (albeit spelled out more precisely in its [Second Bifurcation Response] than in its Amended Statement of Claim) that the Respondent's subsequent actions were 'obviously intended to drive out the Claimant and ABG Infra,'" a theory of intentional targeting of the upstream ownership of HBT that LDA promised "will be explained fully and in detail … at the merits stage."⁶⁴⁵ The Tribunal stated that it "offers no view at present about the persuasiveness of this argument," but "observe[s] that the analysis appears to involve important embedded issues of fact, regarding inter alia the Respondent's knowledge and intentions with respect to the Claimant and ALBA, separate from HBT. These issues of fact appear to be closely intertwined with the merits, likely requiring detailed review of documentary and witness evidence as well as an evidentiary hearing."⁶⁴⁶

293.

India subsequently requested the Tribunal to require LDA to "set forth its arguments and evidence in support of its new theory of intentional targeting of LDA and ABG Infra," before the case proceeded further.⁶⁴⁷ LDA responded that its theory about India's intentions was not new, but "in fact permeates through" its Amended Statement of Claim.⁶⁴⁸ In PO6, the Tribunal first observed as follows:

It has been evident for some time that the Parties have very different views about whether, and to what extent, the Claimant ultimately must demonstrate wrongful conduct attributable to the Respondent that intentionally targeted either the Claimant or its direct investment in ALBA, as opposed to merely impacting that direct investment by allegedly wrongful conduct directed towards HBT, which the Claimant alleges was known by the Respondent to be controlled by ALBA and by ALBA's shareholders (including the Claimant).⁶⁴⁹

294.

The Tribunal further noted that in PO5, it had deferred this issue to the merits, "precisely because it believes that the point may be difficult to resolve in the abstract[,]" and the Tribunal still considered that to be the necessary approach.⁶⁵⁰ As to the sequence of further pleading, the Tribunal denied India's application to require LDA to particularize its pleading regarding "intentional targeting," but did caution that going forward, the Tribunal would take into account only the arguments and evidence presented in formal pleadings, not in ancillary procedural filings such as the bifurcation exchanges. It accordingly provided LDA the option of either resting on its Amended Statement of Claim, or incorporating into a Further Amended Statement of Claim the allegations and arguments (e.g., about "intentional targeting") that it had raised in its Second Bifurcation Response.⁶⁵¹

295.

On 20 July 2016, LDA submitted its Further Amended Statement of Claim. This pleading added several additional contentions related to LDA's standing to pursue its claims.

296.

First, LDA emphasized India's knowledge of LDA's "investment structure," in the form of the FIPB approval of ALBA as an "operating-cum-holding company" intending to make "downstream investment in the special purpose vehicles that may be set up … for development of several bulk port projects."⁶⁵² LDA alleged that India therefore "understood … that these SPVs operating in the Indian ports were just that – channels through which the Claimant and ABG Infra would be operating in those ports."⁶⁵³ With respect to the issue of so-called "intentional targeting" raised in LDA's Second Bifurcation Response and discussed in the Tribunal's PO5, LDA maintained without change its prior characterization of "a series of targeted actions by State and non-state actors aimed at destroying HBT's operations."⁶⁵⁴ However, it contended that India's "singular focus on which actions are directed at whom and what this means for the dispute has obfuscated the factual reality in the present case," and that "to just focus on HBT and no other entity is to ignore what was really happening on the ground at the time."⁶⁵⁵

297.

Specifically, LDA now contended that "[a]lthough HBT was the nominal actor, the real targets were the Claimant and ABG Infra."⁶⁵⁶ It characterized HBT as "a mere vehicle and essentially an accounting heading for the income and expenditure of ALBA on the Project at HDC. HBT was nominally 'the operator' at the port; but the resources, expertise, decisions and all other aspects were in reality the Claimant's and ABG Infra's, acting jointly."⁶⁵⁷ LDA also contended as follows, with respect to the alleged intent underlying the challenged State conduct:

The inescapable reality is that the facts demonstrate that the actions and inactions of the Indian instrumentalities, at the behest of the Vested Interests, that are the subject of this claim were very obviously intended to drive out the Claimant and ABG Infra, the parties that were the known owners and drivers of the project at HDC, through ALBA. No one had any real interest in HBT as such, as a distinct corporate person. It was the withdrawal of the parties who were driving the Project that was the aim of the Indian instrumentalities, acting at the behest of the Vested Interests; and that is what they achieved. The fact that the withdrawal took the form of the withdrawal by HBT, the purely nominal vehicle for ALBA's operation at HDC, was an incidental and contingent consequence of the way that ALBA had … organised its operation. LDA and ABG Infra, through ALBA, were the drivers of the Project … and were the parties who were intended to, and did, feel most directly the consequences of the conduct in breach of the Treaty. … [T]he Respondent and Vested Interests wanted the LDA/ABG Infra joint venture operation out of HDC. The Respondent and the Vested Interests not only knew that LDA and ABG Infra were the drivers behind the project, but also understood that they were the parties that had to be displaced in order for the Vested Interests to regain control of the port. Only LDA and ABG Infra could withdraw 'HBT' from the port, by ceasing their joint venture operation there: that is why LDA and ABG Infra were the parties targeted by the actions in breach of the Treaty.⁶⁵⁸

298.

According to LDA, "[t]o focus on the question of whether the actions could be said to be directed at HBT (which India's actions obviously were) ignores the factual reality of the targeting of the Claimant and ABG Infra, through ALBA, and the obvious harm they were intended to, and did, suffer."⁶⁵⁹ While the challenged conduct thus "could, in the starkly literal terms of the corporate personalities involved, be said to have been directed at HBT, this company was no more than a proxy for the real targets [,]" and "[t]he actions and omissions were designed to cause losses to them. To ignore this factual reality … leads inevitably to the denial of protection to the actual investors, and negates their rights and remedies under the Treaty."⁶⁶⁰ In summary, LDA contended:

LDA's losses that form its claims in these proceedings are on account of the specific and conscious actions directed at HBT but ultimately specifically targeting the Claimant and ABG Infra. They are not an indirect consequence or an inadvertent effect or the fall-out from a general state measure; and this clearly distinguishes the Claimant's case from other investor-State rulings where the measures or State conduct under challenge was generalised and regulatory in nature, affecting all entities operating in a particular sector.⁶⁶¹

299.

Based on this formulation of LDA's case in the Further Amended Statement of Claim, the Parties proceeded to the further stages of written and oral briefing. A summary of the Parties' legal submissions regarding LDA's standing is set forth below; the Tribunal's analysis follows in Section VII.D.

300.

India contends that there is a critical difference between this case and every previous case allowing a foreign investor to pursue a "reflective loss" claim for conduct directed at a locally incorporated entity: in those cases, the investor held a protected shareholding interest in the entity to which the challenged conduct was directed.⁶⁶² In India's view, even if those cases were considered to be correct in their recognition of reflective loss standing under other investment treaties – which India disputes⁶⁶³ –they still could not support LDA's claims against India in this case. That is because here, despite LDA's several reformulations of its case, the case fundamentally "remain[s] premised on the alleged wrongfulness of treatment 'directed at HBT'" rather than at ALBA, and LDA's investment in HBT is expressly excluded from treaty protection by virtue of Article 2(1).⁶⁶⁴ In these circumstances, allowing LDA to proceed to the merits would circumvent HBT's exclusion from the scope of the France-India BIT.⁶⁶⁵ India maintains that only its interpretation can give meaningful effect to Article 2(1), in situations in which an indirect investment in India is routed through Indian intermediary companies owned by French investors to an extent of less than a 51% shareholding interest.⁶⁶⁶

301.

India contends it is irrelevant that LDA's shareholding in ALBA is a covered "investment" under the France-India BIT. This is because the question before the Tribunal is not whether LDA has a protected shareholding in ALBA, but rather whether that shareholding "grants it standing to claim for losses predicated on treatment of a downstream company [HBT] when that treatment is expressly excluded from the Treaty's treatment standards."⁶⁶⁷ India disputes LDA's reliance on the ICSID concept of "general unity of an investment option" (discussed below), because this concept cannot override the Treaty's express exclusion of LDA's indirect shareholding in HBT from treaty protection as provided by Article 2(1).⁶⁶⁸ By contrast, India contends that any application of the "general unity of an investment option" to this arbitration would in fact support India: LDA's real investment was in HBT, making its shareholding in ALBA "ancillary" to the main investment. Therefore, if LDA's investment in HBT is excluded from protection, its investments in ALBA should be excluded as well.⁶⁶⁹

302.

In other words, India maintains, the fact that LDA's shares in ALBA constitute a "covered investment" does not give LDA "standing to protect those shares from the particular type of indirect harm which [LDA] alleges it suffered."⁶⁷⁰ In India's view, the ordinary meaning of the term "shares," either on its own or in proper context pursuant to a VCLT analysis, does not evince any intent by India and France to allow shareholders to sue simply for deprivation of the economic value of those shares, divorced from any mistreatment targeted at the shareholding interest itself.⁶⁷¹ This is particularly the case where a contrary interpretation would allow circumvention of Article 2(1), which would be contrary to a "good faith" interpretation of the France-India BIT.⁶⁷²

303.

India contests LDA's argument that Article 2(1) should be given a "restricted" meaning in light of the object and purpose of the Treaty, adding that such an interpretation in any event would not assist LDA's case.⁶⁷³ India also denies LDA's allegation that it is seeking to introduce a "suite of limitations" to the word "shares" in the definition of investment, that are unjustified by the context in which that word is used.⁶⁷⁴ India maintains that it is not implying terms into the France-India BIT, but merely construing existing terms in accordance with the VCLT.⁶⁷⁵ India reiterates that the burden is upon LDA to establish that the France-India BIT allows it to bring shareholder claims, and particularly in light of Article 2(1), "claims of the kind Claimant seeks to bring here."⁶⁷⁶ Finally, India submits that LDA's discussion of the manner in which HBT was controlled and managed by LDA has no bearing on the issues before this Tribunal.⁶⁷⁷

304.

According to India, in order to succeed with its claims, LDA must prove that India's actions constituted unlawful treatment of LDA's shareholding in ALBA – i.e., that such actions, while perhaps "directed at" HBT, also constituted "treatment" of LDA's direct shareholding in ALBA.⁶⁷⁸ Yet LDA in its view has been unable to point to a single case that supports its proposition that the "treatment" of HBT could constitute "treatment" of ALBA (an entirely different company).⁶⁷⁹ For India, LDA's argument that India's "treatment" need not be directed at ALBA ignores the text of the France-India BIT, and particularly the definition of the word "treatment."⁶⁸⁰ India relies primarily on the dictionary definition of that term, which it contends supports the proposition that state action must be "directed at" the investment in question in order to qualify as "treatment" of that investment,⁶⁸¹ but it submits that this definition is also supported by the VCLT and by case law.⁶⁸² India also analogizes the notion of "treatment" of an investment to the phrase "measures … relating to" an investment, which appears in NAFTA Chapter 11, and which was interpreted by the Methanex tribunal as requiring something more than a "mere effect of a measure on …an investment."⁶⁸³ It criticizes LDA's attempt to distinguish Methanex as reflecting concerns unique to that case about granting standing to a potentially very large class of putative claimants, arguing that LDA's legal theory here (if accepted as sufficient for standing) likewise also could generate an indeterminate class of investors.⁶⁸⁴

305.

India rejects LDA's submission that by including indirect investments within the definition of "investment," the France-India BIT confirms that the challenged treatment in this case need not be directed at LDA's shareholding in ALBA. India highlights the difference between "indirect treatment" and "indirect ownership" of shares, arguing that the fact that shares are held indirectly does not obviate the fact that the "object of the treatment" under the Treaty's substantive standards "is always in the 'investment' in question, … not the 'investor.'"⁶⁸⁵ India also emphasizes that the Tribunal has not made a decision yet with respect to India's treatment-based objection, but rather expressly joined that issue to the merits.⁶⁸⁶

306.

Relying on the Tribunal's statement in the Decision on Jurisdiction that LDA would have standing to "pursue a properly framed claim for improper treatment of and injury to its direct investment in ALBA," LDA submits it has now satisfied the jurisdictional requirements of the Treaty.⁶⁸⁷ In essence, LDA contends that Article 2(1)'s exclusion of protection to HBT does not prevent it from pursuing a claim focused on injury to the value of its shares in ALBA, even if the decline in ALBA's share value in turn derives from HBT's loss of the anticipated value of the Contract.⁶⁸⁸

307.

LDA argues that while tribunals in other cases have precluded shareholders from bringing claims in relation to assets of a local company in which they hold shares, this has not precluded them from bringing a "reflective loss" claim for the injury to share value, in consequence of interference with the downstream asset. By analogy, according to LDA, Article 2(1)'s exclusion of Treaty protection to its indirect investment in HBT should not preclude it from bringing its claim here. "Just as the preclusion of claims in relation to assets of a company does not preclude a claim for the loss up the corporate chain caused by interference with that asset, so too the preclusion of a claim based on an interest falling within Article 2(1) does not preclude the shareholder claim based on the loss of value caused to a shareholder further up the corporate chain by interference with the aforementioned interest."⁶⁸⁹

308.

LDA concedes that no investment tribunal has yet granted standing for a claim on precisely this basis, but contends "this is hardly a surprising conclusion, given the somewhat unusual circumstances in which this claim is brought."⁶⁹⁰ But there is no reason why a tribunal should not consider LDA's shareholding in ALBA to qualify as an investment covered under the France-India BIT.⁶⁹¹ LDA observes that Article 1(1) of the France-India BIT defines "investment" broadly, and similar language in other treaties has been interpreted expansively,⁶⁹² with tribunals declining to separate out aspects of each investment and instead upholding the "general unity of an investment operation."⁶⁹³ Accordingly, LDA submits that "investments" for purposes of the France-India BIT include not only the core investment, but also ancillary transactions connected thereto that might not constitute covered investments in their own right.⁶⁹⁴ For LDA, its direct shareholding in ALBA falls squarely within the definition of "shares" (and within the wider class of "investments") in Article 1(1)(b) of the France-India BIT, and is therefore protected from all categories of harm to ALBA that are attributable to improper State action.⁶⁹⁵ LDA suggests that "in light of the clearly expressed object and purpose of the Treaty and the extremely broad definition of 'investment' in Article 1(1)," Article 2(1) "ought to be given a restricted meaning."⁶⁹⁶

309.

LDA disputes India's contention that the word "treatment" as used in the France-India BIT must be "construed in the restrictive" sense, meaning "treatment directed at" the investment, to establish jurisdiction.⁶⁹⁷ If this principle were accepted, LDA contends, then no reflective loss claims ever would be permitted, because the shareholder would "at best be 'affected indirectly' by a state's actions and not be the 'object of 'treatment'."⁶⁹⁸ This is because, according to LDA, reflective loss claims by their very nature are directed at the corporate entity or asset.⁶⁹⁹ LDA considers that the same approach should apply here, with Article 2(1) preventing it from suing for HBT's Contract losses, but not preventing it from suing for its own losses in ALBA's share value, even if traceable to the same underlying events involving HBT. LDA fundamentally disagrees with India's alternate framing of the jurisdictional issue, which it characterizes as permitting only shareholder claims involving State interference with shareholder rights as such, e.g., the right to vote and attend meetings and claim dividends. By definition, LDA argues, these are not reflective loss claims.⁷⁰⁰

310.

LDA recalls that while this Tribunal's Decision on Jurisdiction rejected LDA's claim based on its indirect investment in HBT, this was due to Article 2(1), and not to India's arguments about the Treaty purportedly limiting jurisdiction to "treatment" aimed directly at the qualifying investment.⁷⁰¹ The Tribunal did not state that LDA would be required to show "treatment" directed at ALBA or at LDA's shareholding in ALBA.⁷⁰² In any event, LDA submits, nothing in the text of the France-India BIT states that "treatment" of a protected investment must involve actions directed at that investment.⁷⁰³ LDA maintains that State acts resulting in harm to the value of its shareholding in ALBA would still constitute "treatment" of that protected investment, at least in the circumstances of this case, where "measures downstream constitute treatment upstream even though the particular losses suffered upstream may be different."⁷⁰⁴

311.

LDA rejects India's analogy between "treatment" of an investment for purposes of the France-India BIT and the phrase "measures … related to" an investment in NAFTA Article 1101(1), on the basis that the latter appears in a provision unambiguously addressing the scope of State consent to arbitration, whereas "treatment" under the France-India BIT appears only in provisions addressing substantive obligations (and not in all of such provisions).⁷⁰⁵ Moreover, unlike Methanex where the tribunal expressed concerns about very attenuated or remote claims of shareholder standing, the measures here were not many levels removed from the entity asserting consequential harm.⁷⁰⁶ LDA is "in a position that is nothing like that of a portfolio or remote investor"; to the contrary, "[t]he actions that were 'directed at HBT' were targeted at HBT's actual owners," LDA and ABG Infra.⁷⁰⁷ LDA emphasizes this alleged intentional targeting, stating that the case involves a "targeted and concerted effort to harm the Claimant's protected Investment by destroying one of its key projects i.e. the Contract between HBT and KoPT"; India's acts and omissions, "although nominally directed at HBT, were perpetrated with the knowledge of the true ownership of the investment."⁷⁰⁸ There is no threat in these circumstances that allowing LDA's claims could give rise to an "indeterminate class of investors" claiming loss in analogous cases.⁷⁰⁹

312.

LDA also rejects India's "linguistic argument" that the word "treatment," as used in the France-India BIT, implies "movement 'in the direction' of the object of treatment."⁷¹⁰ First, LDA notes that India's argument is tied to specific treaty standards that mention "treatment," and leaves unaddressed LDA's claims under Articles in the France-India BIT that do not mention "treatment," such as the "full and complete protection and safety" standard of Article 4(1) and the expropriation standard of Article 6.⁷¹¹ LDA also emphasizes that India's argument is based largely on dictionary definitions of the word "treatment," without citing any authority to support exclusion of a claim on this basis.⁷¹² India's dictionary understanding of the word "treatment" is also said to be contrary to Article 31(1) of the VCLT, under which interpretation of treaty terms must take account of the object, purpose and context of the treaty, which here require that "treatment" be given a meaning conducive to the promotion of foreign investment.⁷¹³

313.

As the Tribunal noted in its Decision on Jurisdiction, "States are free, if they wish, to extend treaty protection to a subset, rather than to the full universe of potential investments."⁷¹⁴ This can be done in a variety of ways, including (a) narrowing the general definition of "investment" in a treaty; (b) maintaining a broad general definition of "investment" but specifying that the treaty as a whole applies only to a subset of investments (for example in a "scope" clause); (c) maintaining applicability of the treaty as such to all investments, but limiting specific substantive obligations to a subset of investments; or (d) specifying carve-outs from coverage through separate "exclusion" provisions.⁷¹⁵ There is no one mechanism for specifying intent with respect to the scope of intended protection, and a tribunal must be cognizant of intended restrictions wherever they appear in the text of a given treaty.

314.

In this case, as the Tribunal already has noted, the France-India BIT contains a "very broad definition of investment, as comprising 'every kind of asset […] invested in the area of the Contracting Party' in accordance with its laws."⁷¹⁶ At the same time, the Treaty also includes a provision entitled "Scope of the Agreement," whose "very function … is to delineate … the Treaty's jurisdictional reach."⁷¹⁷ By virtue of this provision, the Tribunal has found that the Treaty excludes indirect investments structured in a certain fashion. Here, LDA and its joint venture partner made a choice in designing the investment structure for HBT, namely that they would invest in it through an intermediate entity (ALBA) rather than directly, and that they would allocate less than 51% of ALBA's shares to LDA. Such choices have consequences, however, and in this case, the consequence is that LDA's "indirect investment in HBT does not fall within the scope of covered investments" under the France-India BIT.⁷¹⁸

315.

Given these findings, the Tribunal must be careful to read each of the Treaty's substantive protections as referring, each time it references the term "investment," only to a protected investment, and not to HBT itself as an unprotected investment. As the Tribunal already has noted, only in this fashion can one respect the intentions of the Contracting Parties, because "[a] provision delineating the 'Scope of the Agreement' … functions as a gateway. Only investors and investments that are entitled to pass through that gateway may then invoke the protections of the Treaty's other provisions, including … its provisions on substantive protection …."⁷¹⁹ Another way of stating the proposition is that the Tribunal will have jurisdiction to consider claims of Treaty breach only insofar as those claims are presented as challenging conduct attributable to the State with respect to a protected, rather than an unprotected, investment.

316.

The substantive provisions of the Treaty will be relevant in another respect. These provisions not only address the particular type of State conduct that is proscribed; they also contain what might be called "linkage" language, specifying – through words like "treatment" or otherwise – the nature of the connection that is required between the State conduct and the protected investment, in order for the proscription on that conduct to apply and the violation of that proscription to give rise to a Treaty breach. A claimant bears the burden of showing not only that certain State conduct has occurred, but also that it occurred vis-à-vis (i.e., with the requisite connection to) the protected investment. That burden cannot be circumvented by showing State conduct with respect to a different, unprotected investment, unless the same conduct also satisfies the required connection to the protected investment.

317.

In focusing on this question – whether the State conduct satisfies the required connection to a protected investment –it generally will not be sufficient simply to observe that conduct taken with respect to an unprotected investment may have consequential impact on a protected one. LDA appears to recognize this at least at the level of principle, in attempting to distinguish its case (on the basis of the "intentional targeting" theory) from one where an upstream entity experiences "an indirect consequence or an inadvertent effect or the fall-out from a general State measure …."⁷²⁰ This is because tracing economic impact –a necessary exercise for a damages claim by an upstream entity – is not the same thing as demonstrating wrongdoing in the first place. Since State conduct towards an unprotected entity cannot be wrongful under a treaty – the treaty not proscribing any particular conduct with respect to unprotected entities – then the fact that such conduct might have ripple effects on other protected entities will not, in and of itself, render the same conduct wrongful. Something additional (beyond an economic ripple effect) must be demonstrated in order to establish a violation of treaty obligations with respect to the protected investment itself.

318.

This proposition may be best illustrated by analogy to a different type of exclusion from treaty coverage, namely an exclusion for investments in particular economic sectors. In a hypothetical situation where a treaty expressly denies protection to investments in a given sector (for example, oilfield investments), an investor who holds shares in an entity in another sector (say, financial services) could not point to the fact that the financial services entity held shares in an oilfield entity, and thereby establish jurisdiction to challenge State conduct in the oil sector simply because such conduct had ripple effects that diminished the value of the claimant's investment in the financial services entity. The fact that this was a protected investment under the applicable treaty might be undisputed, but this would not be sufficient to circumvent the exclusion of treaty protection for oilfield investments. Rather, the investor would have to show some wrongful conduct with respect to the protected (financial services) investment, and not simply the consequential effect on that entity of State conduct in the oil sector for which it had expressly excluded any treaty obligations.

319.

So, too, in this case. The France-India BIT's specific exclusion of protection to indirect investments such as LDA's investment in HBT cannot be circumvented by presenting a challenge that remains predicated on State conduct vis-à-vis HBT, simply by observing that such conduct had a traceable economic impact through HBT to ALBA, and accordingly on the value of LDA's shares in ALBA. Whatever on

Jean E. Kalicki	President
J. Christopher Thomas	Appointed by the State
Julian D.M. Lew	Appointed by the investor

LDA v. India

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Award

GLOSSARY OF DEFINED TERMS /LIST OF ABBREVIATIONS

I. INTRODUCTION

II. THE PARTIES AND THEIR REPRESENTATIVES

III. RELEVANT LEGAL PROVISIONS

A. The Treaty

B. THE VCLT

IV. PROCEDURAL HISTORY

A. Commencement of the Arbitration

B. Constitution of the tribunal

C. Initial Procedural Steps

D. Bifurcation of Proceedings and Decision on Jurisdiction

E. LDA’s Claim Reformulation and India’s Second Bifurcation Request

F. Subsequent Pre-Hearing Procedural Steps

G. The Hearing

H. Post-Hearing Proceedings

V. OVERVIEW OF THE DISPUTE AND REQUESTS FOR RELIEF

A. Summary of LDA’s Position

B. SUMMARY OF INDIA'S POSITION

VI. STATEMENT OF FACTS

A. THE TENDER FOR CARGO HANDLING OPERATIONS AT THE BERTHS

1. The Unprecedented Nature of the Proposed Project

2. The Terms of the Tender

3. The Consortium's Bid and the Award

B. THE LETTER OF INTENT

C. LDA'S ENTRY AS AN INVESTOR INTO THE PROJECT

D. THE CONTRACT

E. EVENTS BETWEEN CONTRACT AND COMMISSIONING

1. Labor Unrest and its Early Manifestations

2. Delays and Obstacles to Equipment Delivery

3. Demands for Wider Employment

4. Renewed Questions About HBT's Ownership

5. The Issuance of the Commissioning Certificate

F. OPERATIONS FROM FALL 2010 THROUGH MID-2012

1. Continuing Labor Issues

2. Shore Handling Issues, the Request for MLP Reduction, and Invoice Disputes

3. Cargo Allocation to HBT

G. THE CRISIS PERIOD LEADING TO CONTRACT TERMINATION

1. Issues Heating Up in the Summer of 2012

2. The Notice of Suspension and the Consent Order

3. Labor Unrest Against KoPT Outside the Dock Area

4. HBT Terminates Five Star and Retrenches 275 Workers

5. Amid Unrest, HBT and KoPT Call for More Government Assistance

6. The Court Order of Protection and Efforts to Implement It

7. The "Abduction" and the Notice of Termination

H. POST-TERMINATION EVENTS

1. Treatment of HDC's Equipment

2. Blacklisting Proceedings

3. Ministry of Shipping Fact-Finding Report

4. Subsequent Tenders for Cargo-Handling Operations at the Berths

5. The Pending Commercial Arbitration

6. Alleged Obstacles by India to the Commencement of This Arbitration

VII. THE JURISDICTIONAL IMPLICATIONS OF TREATY ARTICLE 2(1)

A. THE ARTICLE 2(1) OBJECTION IN THE CONTEXT OF INDIA'S OTHER JURISDICTIONAL OBJECTIONS

B. THE TRIBUNAL'S PRIOR RULINGS AND LDA'S CASE REFORMULATIONS

1. LDA's Initial Formulation and The Tribunal's Decision on Jurisdiction

2. LDA's First Reformulation and the Tribunal's Comments

3. LDA's Further Reformulation in Its Further Amended Statement of Claim

C. THE PARTIES'POSITIONS REGARDING LDA'S STANDING TO SUE

1. India's Position

2. LDA's Position

D. THE TRIBUNAL'S ANALYSIS: THE CONTINUING IMPLICATIONS OF ARTICLE 2(1)