Friday, November 1, 2013

Int' Arbitrations Hijacking Domestic Judicial System, Says FM.

According to this report  in Business Standard earlier this month, India’s finance minister P Chidambaram gave a statement to a very well-known think tank in the USA that international arbitration was hijacking the domestic judicial system.  He told that this opinion was also shared by the Australian Treasurer, Joe Hockey who he met during the annual plenary meeting of the International Monetary Fund and the World Bank. 

Following are the excerpts of what he said:

"We think that international arbitration is hijacking the domestic judicial system. There are two major concerns. Commercial arbitrations between Party A and Party B, sovereign is being dragged into quite unnecessarily and unjustified,"

"The second concern is that the judgments of the highest court in the country are being made subject to international arbitration,"

“We believe in efficacy of bilateral investment protection agreements. We want such international agreements. But we want to guard against the ingeniously interpreted to enlarge the jurisdiction of international arbitrations. And you would agree with me that there are numerous cases of jurisdiction hopping and jurisdiction shopping in international arbitration today"

I understand his statements are more in context of the White Industries Case where a commercial arbitration eventually turned into an investment arbitration. The worried tone also refers to the deluge of investment treaty claims that India faces today.  However, “hijacking the domestic judicial system” is not quite an apt phrase which should be used in this context.  On a policy level it only shows that the government is turning obstinate and defensive rather than taking active corrective measures. Anyone wanting to read my detailed analysis of White Industries Case in Kluwer's Journal of International Arbitration can let me know and I will be happy to share it. The abstract of the article at the end of this post

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