Recently, the Government of India issued a press release announcing that the International Arbitration Tribunal has altogether dismissed claims lodged against the country. The claims originated from the cancellation of Letters of Intent for the provision of 2G telecommunications services. The Tribunal made the decision in July 2019, abiding by the rules of the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules of 1976. The Permanent Court of Arbitration (PCA) administered the proceedings.
Entities Involved and Agreements Made
Several parties claimed against India under the Bilateral Investment Treaties with Cyprus and the Russian Federation. These claimants included Tenoch Holdings Limited, based in Cyprus, along with Mr Maxim Naumchenko and Mr Andrey Poluektov, both from the Russian Federation. These treaties between two countries permit a private investor to instigate dispute arbitration proceedings against the government to safeguard its investments.
The arbitration process took place in concurrence with the Agreement signed between the Government of the Russian Federation and the Government of the Republic of India, aiming at promoting and mutually protecting investments. A similar agreement was also co-signed by the Government of the Republic of Cyprus and India.
The Reason Behind the Claim
The arbitration was initiated because of the revocation of Letters of Intent. These documents were meant for issuing telecom licenses for the provision of 2G services in five telecommunication circles within India, principally to safeguard India’s essential security interests.
Understanding Letters of Intent
A Letter Of Intent (LOI) is a document that expresses the preliminary commitment of one party to do business with another. It’s often used as an initial proposal to the other party in the corporate world.
Overview of the International Arbitration Tribunal
The International Arbitration Tribunal is an autonomous non-governmental group of independent and impartial professionals. They are usually nominated by the Parties (or selected by the International Arbitration Institution or a National Court) based on their legal knowledge and practical expertise. Their role is to deliver a final and binding award.
| Establishment Year | Headquarters | Purpose |
|---|---|---|
| 1899 | The Hague, Netherlands | To provide international community with dispute resolution services |
Structuring of the Permanent Court of Arbitration
The PCA was established to serve the international community in the realm of dispute resolution and facilitate arbitration among other forms of inter-state dispute resolution. It consists of:
- The Administrative Council, responsible for managing policies and budgets
- Members of the Court, a group of independent potential arbitrators
- International Bureau, its Secretariat led by the Secretary-General.
The PCA also maintains a Financial Assistance Fund. The purpose of this fund is to assist developing nations in meeting some of the costs associated with international arbitration or other dispute resolution methods provided by the PCA.
