\n<\/p>\n
In January 2025, a Full Court of the Federal Court of Australia (\u201cFull Court\u201d) upheld a claim by the Republic of India (\u201cIndia\u201d) to foreign state immunity from proceedings brought by various Mauritian entities (the \u201cInvestors\u201d) to enforce an arbitral award<\/a> in the Australian courts. The Full Court upheld immunity on the basis of India\u2019s commercial reservation<\/a> to the New York Convention<\/a>, and allowed India\u2019s appeal against the primary judgment<\/a> (\u201cPJ\u201d) of a single Judge of the Federal Court of Australia.<\/p>\n The Full Court\u2019s unanimous judgment<\/a> (\u201cReasons\u201d) is notable not only for what it did<\/em> decide in allowing the appeal, but also for what it did not<\/em> decide. For example, the appeal did not resolve a threshold issue concerning the scope of the New York Convention, as addressed below.<\/p>\n Further, the outcome stands in contrast to a judgment of the Quebec Court of Appeal, handed down only two months earlier. That judgment held that India had waived its immunity from enforcement through having consented to arbitration under the relevant bilateral investment treaty (as discussed here<\/a>).<\/p>\n The application by the Investors for special leave to appeal to the High Court of Australia filed on 28 February 2025 \u2013 as well as any notice of contention on the part of India as may be filed \u2013 will be closely watched.<\/p>\n \u00a0<\/p>\n Background<\/strong><\/p>\n These proceedings are the Australian enforcement chapter of a very hard-fought underlying dispute between the Investors and India under the 1998 India-Mauritius Bilateral Investment Treaty<\/a> (the \u201cBIT\u201d) (see previous coverage on the Blog here<\/a>, here<\/a>, here<\/a>, and here<\/a>).<\/p>\n In 2005, a subsidiary of the Investors entered into an agreement with Antrix Corporation Ltd (\u201cAntrix\u201d), a corporation wholly owned by India, for the lease of space segment capacity on two Indian satellites that were yet to be built. Subsequently, in 2011, India decided to reserve that capacity for \u201cnational needs [\u2026] having regard to the needs of the country\u2019s strategic requirements\u201d, following which Antrix annulled the agreement.<\/p>\n In July 2012, the Investors commenced arbitral proceedings against India under the BIT administered by the Permanent Court of Arbitration. In 2016, the tribunal rendered an award on jurisdiction and on the merits<\/a>, concluding relevantly that there had been an expropriation and a breach of the obligation to afford fair and equitable treatment. In 2020, the tribunal rendered a quantum award<\/a>, which ordered India to pay compensation in an amount totalling some USD 111 million, plus interest.<\/p>\n The Australian enforcement proceedings related only to the latter quantum award.<\/p>\n \u00a0<\/p>\n What the Full Court Decided<\/strong><\/p>\n In a crisp judgment, the Full Court zeroed in on a central issue: the scope and consequences of India\u2019s reservation under Art I(3) of the New York Convention that India \u201cwill apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the law of India\u201d (the \u201ccommercial reservation\u201d). It was common ground that the underlying dispute did not arise from a commercial relationship (Reasons, [76]-[82]). The issue was whether, and if so how, the reservation operated in circumstances where Australia did not have a reciprocal reservation.<\/p>\n At first instance, the primary judge had held that India\u2019s commercial reservation was \u201cnot directly relevant\u201d, since \u201cAustralia did not make any such reservation and Australia is the State where recognition and enforcement is presently sought\u201d (PJ, [58]). The primary judge effectively required a reservation to be accepted or otherwise reciprocated in some way by the enforcing State.<\/p>\n The Full Court rejected this reasoning, on the following bases:<\/p>\n Accordingly, the Full Court held that India had not unmistakably waived foreign state immunity to which it was otherwise entitled in the Australian courts (Reasons, [75]).<\/p>\n \u00a0<\/p>\n What the Full Court Did Not Decide<\/strong><\/p>\n In light of the manner in which it resolved the appeal, the Full Court left open at least two other important questions.<\/p>\n First, whether the New York Convention only applies to awards to which States are parties and where the underlying transaction involves a private law dispute or a commercial transaction by the State. The primary judge had found against India on this question, holding that there was no textual basis in the New York Convention for that limitation (PJ, [58]-[93]). India renewed the issue on appeal by reference to the object and purpose of that treaty. The Full Court, however, put this issue to one side by simply assuming (in the Investors\u2019 favour), without deciding, that the primary judge was correct that there was no such limitation (Reasons, [53]; [36]-[44] record the primary judge\u2019s reasoning on this question). This threshold issue concerning the scope of the New York Convention was not resolved by the appeal.<\/p>\n Second, if the New York Convention applies to such awards, then whether Art III thereof (which contains the promise of each Contracting State to recognise arbitral awards as binding and to enforce them) effects an \u201cunmistakeable waiver\u201d of State immunity by India in respect of awards that are not excluded by its commercial reservation. The primary judge had also found against India on this question (PJ, [34]-[51]). While the High Court of Australia in Kingdom of Spain v Infrastructure Services Luxembourg S.a\u0300.r.l.<\/em> [2023] HCA 11; (2023) 275 CLR 292<\/a> had confined its judgment to the ICSID Convention (see prior blog post<\/a>), the primary judge applied the principles as articulated by the High Court of Australia (and which the English Court of Appeal subsequently considered was both \u201chighly persuasive\u201d and \u201cplainly right\u201d: Infrastructure Services Luxembourg S.a\u0300.r.l. v Kingdom of Spain<\/em> [2024] EWCA Civ 1257<\/a> at [77] (see also General Dynamics United Kingdom Limited v the State of Libya <\/em>[2025] EWCA Civ 134<\/a> at [33]-[35], which was handed down after the Full Court\u2019s judgment)). In applying those principles, the primary judge concluded that India had \u201cby way of clear and unmistakable necessary implication\u201d submitted to the jurisdiction of the Australian courts by agreement through having ratified the New York Convention.<\/p>\n On appeal, India renewed its submission that it had not waived immunity in any respect by reference to the terms, context, object, and purpose of, and State practice in relation to, the New York Convention. India\u2019s detailed submissions on this issue were not recorded in the judgment by the Full Court, because ultimately, the Full Court declined to express any final conclusion on the question. Instead, the Full Court simply observed at [72] that \u201c[t]here is much to be said\u201d for the primary judge\u2019s reasoning.<\/p>\n \u00a0<\/p>\n Conclusion<\/strong><\/p>\n The basis on which the Full Court upheld India\u2019s immunity does not yet appear to have received much attention in the various enforcement proceedings around the world. Inevitably, the Full Court\u2019s judgment will draw renewed scholarly and judicial attention to the question of the scope and consequences of India\u2019s commercial reservation.<\/p>\n The consequences of the Full Court\u2019s approach may extend well beyond India, since many other Contracting States \u00a0have made a similar commercial reservation (or declaration). The interaction of the terms of these reservations with domestic law as to immunity, including Australia\u2019s domestic law, is certain to be tested over time.<\/p>\n Additionally, it may be open to India (in response to the application by the Investors for special leave to appeal) to re-agitate the questions left open by way of a notice of contention. That would allow India to contend that the judgment of the Full Court should be upheld on the ground that the Full Court had failed to decide or decided in error. Whether the High Court of Australia grants special leave (and if so in respect of which question(s)) is, of course, another matter entirely.<\/p>\n <\/div>\n\n","protected":false},"excerpt":{"rendered":" In January 2025, a Full Court of the Federal Court of Australia (\u201cFull Court\u201d) upheld a claim by the Republic of India (\u201cIndia\u201d) to foreign state immunity from proceedings brought by various Mauritian entities (the \u201cInvestors\u201d) to enforce an arbitral award in the Australian courts. The Full Court upheld immunity on the basis of India\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":109421,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[3573,69895,410,11267,18750,69896,11558,247,11632,8707,4921],"dealstore":[],"offerexpiration":[],"class_list":["post-175286","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-australia","tag-ccdm","tag-court","tag-decide","tag-decided","tag-fcafc","tag-federal","tag-full","tag-holdings","tag-india","tag-republic"],"yoast_head":"\n\n