French firm Louis Dreyfus Armateurs serves global arbitration notice on India

NEW DELHI: Louis Dreyfus Armateurs, a French shipping services and maritime transportation company, has served a notice for international arbitration to India after the firm pulled out from Haldia Port venture two years ago.

The company has invoked bilateral investment promotion and protection agreement (BIPPA) and the notice was served on March 31.

“The company has given a notice for international arbitration…. We believe that there is no merit in the case,” said a government official familiar with the development. An inter-ministerial group had met last week to discuss the fallout of the arbitration notice and finalise government’s stand in the case, another government official said on condition of anonymity.

The French company in its notice, served last month, has charged the Indian government with preventing effective implementation of the project, financially crippling it and failing to provide protection and security to the investment and personnel. The shipping major has also charged the government for not following court orders on the issue of handing over its equipment.
“We hope the Indian government will settle this matter so that investors will again look at Indian infrastructure as a strategic and positive move for economic development of India,” Gildas Maire, CEO, Louis Dreyfus, said in an e-mailed statement. The government official expressed surprise at the company’s move and said conciliation proceedings under the domestic laws had already been initiated as per directions of the court.

This latest arbitration notice adds to the 17 others already served by other individual investors and companies. “The general view is that the provisions of the agreement cannot be invoked in this case. The company is a minority shareholder and thus, does not qualify as an investor as per the treaty,” the official said.

Louis Dreyfus had invested in ABG Ports for implementing a project aimed at mechanisation of berths at Haldia in West Bengal. ABG Haldia Bulk Terminals’, the venture in which LDA had indirect investment, pulled out in 2012 from the Haldia project, billed as one of the biggest exits by a company after Tata Motors withdrew from Singur.

ABG Haldia Bulk Terminals gave a notice of termination of its10-year contract to the Kolkata Port Trust on November 1, 2012. The company claimed its officials were threatened and three of them were even abducted, including one with his family.

LDA holds 49% in ABG-LDA Bulk Handling Pvt Ltd while ABG Port holds 51%. ABG Ports through another layer of companies holds 63% stake in ABG Haldia Bulk Terminals, the company at the centre of the dispute, as per details available with the government. Effectively, according to government estimates, LDA has only 30.87% equity in ABG Haldia Bulk Terminals.

The French company was also inducted against the terms of the contract given out by Kolkata Port Trust. The shipping ministry keen for development of the port, allowed it, according to the government official.

ByCell, Deutsche Telekom, Vodafone International Holdings BV, Sistema of Russia, Children`s Investment Fund and TCI Cyprus Holdings have also served notices to India under investment agreements after their investments (it cannot be funds) ran into trouble in India. White Industries Australia got a favourable award against the Indian government.