French firm suffers a jolt

French logistics firm Louis Dreyfus Armateurs (LDA) has lost an international arbitration against the Government of India in relation to its investment in a company that pulled out from Haldia Dock alleging strong-arm tactics from entrenched players, laced with political backing.

By Sambit Saha in Calcutta
  • Published 12.09.18
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Calcutta: French logistics firm Louis Dreyfus Armateurs (LDA) has lost an international arbitration against the Government of India in relation to its investment in a company that pulled out from Haldia Dock alleging strong-arm tactics from entrenched players, laced with political backing.

The Permanent Court of Arbitration (PCA), based in London, also directed the French company to pay $7.16 million (Rs 52.04 crore) towards legal expenses incurred by the Calcutta Port Trust (CPT).

The French company lost out on the question of jurisdiction as the tribunal did not go into the merit of the case.

LDA was an indirect shareholder in Haldia Bulk Terminal Ltd (HBT) which had won a 10-year contract from CPT to operate two mobile harbour cranes in berths 2 and 8 on April 29, 2009.

However, the company pulled out on December 12, 2012, complaining non-allocation of adequate cargo, mounting losses and the law and order situation in Haldia.

The matter first landed in Calcutta High Court and then went to the Arbitral Tribunal in India.

While the domestic arbitration was on, LDA decided to take the Indian government, under the provisions of the Bilateral Investment Promotion & Protection Agreement (BIPA) between India and France, to the PCA, filing a claim of $36.15 million (Rs 262 crore).

The tribunal held that LDA's investment was not entitled to protections under BIPA as it did not have a minimum 51 per cent investment in the project.

In domestic arbitration, which is examining the merit of the case, CPT has demanded Rs 750 crore from HBT which in turn demanded Rs 290 crore from CPT.

The LDA claim, if upheld by the tribunal, could have been politically damaging for the Trinamul Congress government.

The company had alleged that India failed to protect its investment made through the project. It further alleged that no action was taken by the police against the various FIRs lodged by them while bringing equipment to HDC for the project as well as during the operation of the contract. Hence, the local authorities failed to ensure a conducive work atmosphere and law and order in and around Haldia Dock Complex, it said.