As India and Italy Investigate, Arbitration Ensues.

The infamous chopper gate scam which the Indian and Italian government authorities have been investigating is going to have new twist to it. According to this report from the Reuters, AgustaWestland, the seller of Helicopters to India has invoked the arbitration clause. The dispute is on non-payment in a contract worth 560 million euro ($762.91 million) involving sale of 12 Helicopters by the company to India. India had stopped the payment over allegation of bribery. Arrest of the then CEO of Finmeccanica was also much in news after he allegedly paid bribe to officials in India to secure the deal.

In a statement to Reuters, the company said:

"The need to resolve this issue has left AgustaWestland with no other option but to invoke arbitration; the next step prescribed by the contract. This is not a step we take lightly,"

According to the report, the law governing the arbitration agreement is the Indian Arbitration and Conciliation Act, 1996.

It would be very interesting to see how the arbitration proceeds under the Indian arbitration Act. This is because in N Radhakrishnan v Maestro Engineering, a case decided in 2009, the Supreme Court of India had held that issues involving criminality, serious fraud and financial malpractices can only be resolved by court. Although, this is not in conformity with the international standards, it stands valid where the seat is India.

A report on this from Economic Times is also available here. Picture taken from here.