Memohnlu PDF
Memohnlu PDF
Memohnlu PDF
and
Article 9(2)(b) of the Agreement between the Government of the Republic of India and the Government of
Republic of Malta for Promotion and Protection of Investments
v.
v.
Most Respectfully Submitted to the Hon’ble Chief Justice of India & Other Companion
Judges of the Supreme Court of India
CONTENTS PAGE
II. WHETHER ANCOA LTD. IS JUSTIFIED IN ALLEGING VIOLATION OF NATIONAL TREATMENT, MFN
AND FAIR AND EQUITABLE TREATMENT UNDER THE BIT BETWEEN REPUBLIC OF INDIA AND
REPUBLIC OF MALTA?
CASES
1. ABB/Daimler-Benz, (Case IV/M.580) OJ [1997] L11/1 ...............................................................4
2. ADF Group Inc. v. United States, ICSID Case No. ARB (AF)/00/1, Award, 9 January 2003, .... 10
3. Air France v. Commission, Case C-202/88 .................................................................................1
4. Airtours / First Choice, 2000 OJ L93/1 ......................................................................................6
5. Alpha Project Holding Gmbh v. Ukraine, ICSID Case No. ARB/07/16, November 8, 2010 ...... 11
6. Azurix v. Argentine Republic, ICSID Case No. ARB/01/12, Award, July 14, 2006 .................... 10
7. Bandhua Mukti Morcha v. Union of India, AIR 1984 SC 802 .....................................................9
8. Bertelsmann/Kirch/Premiere, Case M.993 OJ 1999 L53/1 ..........................................................7
9. Brown Shoe Company v. United States, 370 US 294 (1961) ........................................................7
10. Cargill v. Mexico, ICSID Case No. ARB(AF)/05/2, Award, 18 September 2009 ....................... 10
11. CMS Gas Transmission Co. v. Argentine Republic, Case ARB/01/8, Award, May 12, 2005 ...... 11
12. Compañiá de Aguas del Aconquija S.A. and Vivendi Universal v. Argentina, ICSID Case No.
ARB/97/3, Award, .................................................................................................................... 10
13. Comptroller And Auditor General Of India v. Ks Jagannathan, AIR 1987 SC 537......................9
14. Gami Inv. Inc. v. United Mexican States, NAFTA Ch. 11 Arb. Trib. Nov. 15, 2004 .................. 13
15. Genin and others v. Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001........................ 10
16. Grencor v. Commission, Case T-102/96 ......................................................................................7
17. Guinness/Grand Metropolitan, (Case IV/M.938) [1998] OJ L288/24 ..........................................5
18. Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, June 21, 2011 ................. 10
19. Kesavnanda Bharti v. State of Kerala, AIR 1973 SC 1461 ..........................................................9
20. Laxmi Kant Pandey v. Union of India, AIR 1987 SC 232 ............................................................9
21. LG&E Energy Corp. v. Argentina, ICSID Case No. ARB/02/01, Decision on Liability (Oct. 3,
2006) ........................................................................................................................................ 11
22. Marvin Feldman v. Mexico, Award of 16 December 2002 (Kerameus, Covarrubias Bravo,
Gantz), 18 ICSID-Rev.- FILJ 488 (2003), ................................................................................. 13
23. Mondev International v. United States of America tribunal, ICSID Case No. ARB(AF)/99/2,
Award, October 11, 2002, ......................................................................................................... 11
DICTIONARIES
AIYAR, RAMANATHA P.: “THE LAW LEXICON”, WADHWA & COMPANY, 2ND EDN. NAGPUR
(2002).
BLACK, HENRY CAMPBELL: ‘BLACKS LAW DICTIONARY’, 6TH ED., CENTENNIAL ED. (1891-
1991).
CURZON. L. B: “DICTIONARY OF LAW”, PITMAN PUBLISHING, 4TH EDN. NEW DELHI (1994).
GARNER, BRYAN A.: “A DICTIONARY OF MODERN LEGAL USAGE”, OXFORD UNIVERSITY
PRESS2ND EDN. OXFORD (1995).
GREENBERG, DANIEL AND ALEXANDRA, MILLBROOK: “STROUD’S JUDICIAL DICTIONARY
OF WORDS & PHRASES”, VOL. 2, 6TH ED., LONDON: SWEET & MAXWELL (2000).
JUSTICE DESAI, M.C. AND AIYAR, SUBRAMANYAM: “LAW LEXICON & LEGAL MAXIMS”,
2ND ED., DELHI: DELHI LAW HOUSE (1980).
MITRA, B.C. & MOITRA, A.C., “LEGAL THESARUS”, UNIVERSITY BOOK, ALLAHABAD (1997).
OPPE., A.S., “WHARTON’S LAW LEXICON”, 14TH ED., NEW DELHI: SWEET & MAXWELL (1997).
STATUTORY COMPILATIONS
http://www.findlaw.com
http://www.indiankanoon.com
http://www.jstor.org.
http://www.eur-lex.europa.eu/LexUriServ.
http://www.cci.gov.in
http://www.manupatra.com
THE APPELLANTS HAVE APPROACHED THE HON’BLE SUPREME COURT UNDER SECTION 53T THE
COMPETITION ACT,2002 AND ARTICLE 9(2)(B) OF THE AGREEMENT BETWEEN THE GOVERNMENT
OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF MALTA FOR PROMOTION
THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT OR THE COMMISSION OR ANY STATUTORY
AUTHORITY OR ANY LOCAL AUTHORITY OR ANY ENTERPRISE OR ANY PERSON AGGRIEVED BY ANY
DECISION OR ORDER OF THE APPELLATE TRIBUNAL MAY FILE AN APPEAL TO THE SUPREME COURT
WITHIN SIXTY DAYS FROM THE DATE OF COMMUNICATION OF THE DECISION OR ORDER OF THE
PROVIDED THAT THE SUPREME COURT MAY, IF IT IS SATISFIED THAT THE APPLICANT WAS PREVENTED
BY SUFFICIENT CAUSE FROM FILING THE APPEAL WITHIN THE SAID PERIOD, ALLOW IT TO BE FILED
(1)…
(2) IF AMICABLE SETTLEMENT OF DISPUTE IS NOT POSSIBLE, DISPUTE SHALL BE RESOLVED ACCORDING
TO LAW AND REGULATION OF THE HOST STATE UNLESS OTHERWISE AGREED BETWEEN THE PARTIES TO
(A)...
(B) APPEAL AGAINST THE DECISION OF THE TRIBUNAL WOULD LIE TO THE APEX COURT OF HOST STATE.
THE FOLLOWING ISSUES FOR CONSIDERATION HAVE COME UP BEFORE THE HON’BLE SUPREME
COURT OF INDIA.
TREATMENT, MFN AND FAIR AND EQUITABLE TREATMENT UNDER THE BIT BETWEEN
The appeal before the Hon’ble Supreme Court is maintainable under Sect ion 53T. It provides
that any person aggrieved by any order or decisio n of the COMPAT can file an appeal before the
Supreme Court. Since, Lamco India is aggrieved by the instant acquisit ion, it is an aggrieved
party. It, therefore, has the locus standi to file the instant appeal.
The acquisit io n o f shares in Potcorp by Bharat Ltd constitutes a ‘combinat ion’ for the purposes
of the Co mpet it ion Act, 2002. Objections were filed by the appellant with the Co mpet it ion
Commissio n o f India. Object ions are only invit ed after the CCI has formed its prima facie
opinio n that the co mbinat ion has an appreciable adverse effect on competit ion in the relevant
market. Thus, it can be concluded that acquisit ion is a co mbinat ion under the Co mpet it ion Act,
2002.
Definit ion o f relevant market is a significant part of determining the nature of a co mbination.
The relevant market is that of potash as a raw material for manufacture of fert ilizer in India.
The co mbinat ion entered into between BPL and Potcorp is likely to have an adverse effect on the
compet it ion in the potash market of India. Relevant factors that shall be considered in
determining the likely ant i – co mpetit ive effects are level o f co mpetit ion in t he market, the
market shares of the co mbining ent it ies, the barriers to entry, the capabilit y o f the parties to
substant ially and significant ly raise prices and profit margins, etc. In view of these factors, it can
easily be concluded that the said combinat ion is likely to have appreciable adverse effects on the
Ancoa Ltd. is justified in alleging the vio lat ion of the fair and equitable treatment on the ground
that the legit imate expectations were not fulfilled and the Government acted in an arbitrar y
manner by protecting its own companies, granting waiver o f the loan. Such act ion is vio lative o f
the fair and equitable treatment. Moreover, the conduct of GOI is favourable to its own industries
and vio lat ive o f nat ional treatment because Bharat Public Ltd. and Lamco India Ltd. are situated
in like circumstances, but the former which is an Indian co mpany has been accorded more
favorable treatment than the latter. Hence due to such treatment, the returns of Ancoa Ltd. have
diminished considerably and it has a valid ground to claim vio lat ion of this obligat ion of the
Unio n of India.
The most favoured nat ion treatment as obligated by the agreement, has been vio lated by the
Government of India by according more favourable treatment to Amco India Ltd. It is contended
that despite of being situated in “similar circumstances”, both Ancoa Ltd. and Amco India Ltd.
are treated differently. Hence Amco India Ltd. was granted “More Favourable Treatment”. This
I. W H E T H E R D E C IS IO N O F T H E C O M PE T IT IO N A PP E L L A T E T R IB U N A L
A L L O W I N G T H E A C Q U IS IT IO N O F S H A R E S B Y B H A R A T PU B L IC L T D . W A S
J U S TIF IE D ?
The present appeal has been filed by the appellants, Lamco India Ltd., against the decision of the
Competition Appellate Tribunal1 allowing acquisition of 55% shares by the respondent, Bharat
Public Ltd2, in Potcorp Public Ltd.3 It is submitted that the appellants have approached the
Hon’ble Supreme Court under Section 53T of the Competition Act, 2002.4
A. THE APPELLANT HAS THE LOCUS STANDI TO APPEAL AGAINST THE ORDER OF THE
1
Also referred to as ‘the COMPAT’.
2
Also referred to as ‘BPL’.
3
Refer to factsheet, at p. 5.
4
Also referred to as ‘the Competition Act’ or ‘the Act’.
5
Section 53T, Competition Act.
6
Paam Pharmaceuticals (Delhi) Ltd. v. Union of India, (2002) 109 Comp. Cas. 897 (Delhi).
7
Warth v. Seldin, 422 US 490 (1975).
8
Article 10(5) and Article 21(1) of the Merger Regulations.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 14 of 30
individual concern”. In Dan Air, 9 the case concerning acquisition of Dan Air by British Airways,
Air France (a competitor of British Airways) could successfully argue that it was directly
concerned on the basis that the Commission’s announcement would quickly lead to a change in
the market, and would also have the effect of denying them a right to be heard under Article
18(4) of the Merger Regulation. They were also held to be individually concerned as the
concentration would substantially reinforce British Airway’s position on routes where Air France
was particularly active.
3. It is humbly submitted that the instant matter relates to BPL’s acquisition of 55% shares in
Potcorp Public Ltd. While BPL is a dominant player in the fertilizer market, Potcorp Ltd is the
only manufacturer of raw material for fertilizer, i.e. potash, in India. The appellant is also a
manufacturer of fertilizers, and requires raw material for the same. It purchased potash to the
tune of 20% of its requirement in January, 2011.10 A vertical integration between the respondent
and Potcorp will significantly affect the market, there lies a possibility of change in supply of
potash in the market. Such a change in supply pattern in the market of raw materials will have a
serious impact on the fertilizer industry – hence, Lamco India Ltd.
4. In light of the law and the facts submitted above, it is humbly submitted before this Hon’ble
Court that the appellants are an “aggrieved party” for the purposes of Section 53T of the
Competition Act, 2002, and they have the locus standi to file the instant appeal. In view of this, it
is pleaded, that the instant appeal is maintainable before the Hon’ble Supreme Court of India.
B. THE ACQUISITION OF SHARES BY BHARAT PUBLIC LTD. IN POTCORP PUBLIC LTD. IS A
9
Air France v. Commission, Case C-202/88.
10
Refer factsheet, at p. 4.
11
Acquisition of control, shares, voting rights or assets, under Section 5(a), Competition Act.
12
Section 6(1) of the Competition Act says, “No person or enterprise shall enter into a combination which causes
or is likely to cause an appreciable adverse effect on competition within the relevant market in India and such a
combination shall be void.”
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 15 of 30
determined, by regulations, disclosing the details of the proposed combination, within execution
of any agreement or other document for acquisition referred to in clause (a) of section 5 or
acquiring of control referred to in clause (b) of that section.” However, the Combination
Regulations13 lay down that for acquisitions referred to in Clause (a) of Section 5, notice needs to
be filed only, where binding document(s) is executed, on or after the 1st day of June, 2011.14
Since, the notice has been filed with the parties to the combination themselves, it can be
presumed that the aforesaid binding documents are executed on or after 1st June, 2011.
6. The Act further provides, under the procedure for investigation of combinations, that “The
Commission may invite any person or member of the public, affected or likely to be affected by
the said combination, to file his written objections, if any, before the Commission within fifteen
working days from the date on which the details of the combination were published under sub-
section (2).”15 It is submitted that in the instant case, the appellant had filed its objections with
the CCI.16 It should be noted that the CCI invites objections from the affected or likely to be
affected by parties only in second phase of investigation, i.e., after the CCI has formed a prima
facie opinion that a combination is likely to cause an appreciable adverse effect on competition
within the relevant market.
7. Furthermore, the CCI has allowed the acquisitions on grounds of economies of scale.17 It is
submitted that such factors as economies of scale are considered during inquiry into combination
by the Commission. 18 It should also be noted that, a notice was filed with the CCI regarding the
proposed scheme of acquiring Pantaloons Format Business by ABNL (Aditya Birla Nuvo
Ltd.), pursuant to a scheme of demerger and merger under Section 391-394 of the Companies
Act, 1956. However, the said notice had been filed pursuant to a Memorandum of Understanding
(MoU) between the parties, which had not been approved by the Board of Directors. The CCI
held that the notice did not fulfill the requirements under Regulation 31, and held that the notice
13
The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations)
Regulations, 2011.
14
Regulation 31, Combination Regulations, 2011.
15
Section 29(3), Competition Act.
16
Refer factsheet, at p. 4.
17
Ibid.
18
Section 20(4), Competition Act.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 16 of 30
filed by the parties was not valid under the Combination Regulations.19 It is submitted that the
abovementioned case is an example of the fact that when a transaction is not a ‘combination’, or,
when it is not notifiable, the CCI gives an order to that effect instead of allowing the acquisition.
Since the CCI has allowed the acquisition in the instant case, it can be safely concluded that the
notice was rightly filed and the acquisition was a combination.
C. THE ACQUISITION IS LIKELY TO CAUSE AN APPRECIABLE ADVERSE EFFECT ON COMPETITION
IN THE RELEVANT MARKET.
8. The Competition Act provides certain factors which should be considered while determining
whether a combination is likely to have an appreciable adverse effect on the relevant market (or
AAEC).20 One of these is definition of relevant market. Relevant market is “the area of effective
competition, within which the defendant operates”.21 Under the Competition Act, “relevant
market” is defined as the market which may be determined by the Commission with reference to
the relevant product market or the relevant geographic market or with reference to both the
markets.22
9. “Relevant product market” is a market comprising all those products or services which are
regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the
products or services, their prices and intended use.”23 The Competition Commission of India24, in
the case of DLF Commercial Developers Ltd,25 identified the relevant market for considering
dominance. The CCI observed that, “definition of market is essentially a matter of
interchangeability that whether the goods or services can be regarded as interchangeable with
other goods/services… The Commission has to determine whether the customer can switch
readily to the available substitutes or suppliers located elsewhere in response to a increase in
price made by an enterprise in the product and if the substitution was enough to make the price
increase unprofitable because of resulting loss of sales.”26 In ABB/Daimler-Benz, 27 the
19
Notice filed for Acquisition of Pantaloons Format Business, C-2012/7/69.
20
Section 20(4), Competition Act.
21
Standard Oil of California and Standard Stations Inc. v. United States, 337 US 293.
22
Section 2(r), Competition Act.
23
Section 2(t), Competition Act.
24
Also referred to as ‘the CCI’.
25
Owners and Occupants Welfare Association v. M/s DLF Commercial Developers Ltd. & Ors, C-15/2012.
26
Id.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 17 of 30
European Commission stated that its established practice in defining the relevant product market
is to consider the functional substitutability of the relevant products in relation to a specific use
from the customer’s point of view. The key criteria are the properties, prices and intended use of
the products.
10. In the instant matter, the relevant product market is that of manufacture and supply of potash as a
raw material for production of fertilizer. It is submitted that India is an agricultural economy, and
much of its agriculture depends upon chemical fertilizers. It is noteworthy that in India, there is
only one manufacturer of potash, viz., Potcorp Public Ltd.28 Some requirement of potash is
fulfilled by the suppliers in the international market.29 The impugned transaction is an acquisition
of shares in Potcorp Ltd by BPL, one of the manufacturers of fertilizers in the country, the
respondent in the instant case.
11. “Relevant geographic market” is a market comprising the area in which the conditions of
competition for supply of goods or provision of services or demand of goods or services are
distinctly homogenous and can be distinguished from the conditions prevailing in the
neighboring areas.”30 In United Brands v. Commission,31 the Court observed: “The
opportunities for competition…must be considered having regards to the particular features of
the products in question and with reference to a clearly defined geographic area in which it is
marketed and where the conditions of competition are sufficiently homogenous for the effect of
the economic power of the undertaking to be able to be evaluated.” Persistence of price
differences may support a finding of distinct national markets.32
12. In the instant matter, the relevant geographic market is India. It cannot be argued that the all the
eight manufacturers of potash in the world form part of the same ‘geographic’ market for the
reason that, in each part of the world, the conditions of competition with regards to potash
market are not homogenous. For example, Ancoa Ltd., one of the eight international suppliers, is
27
ABB/Daimler-Benz, (Case IV/M.580) OJ [1997] L11/1.
28
Refer factsheet, at p. 3.
29
Ibid.
30
Section 2(s), Competition Act.
31
United Brands v. Commission, (1978) ECR 207.
32
For example, in Guinness/Grand Metropolitan, (Case IV/M.938) [1998] OJ L288/24.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 18 of 30
a monopoly in the country of its incorporation, the Republic of Malta.33 It is evident, that the
conditions of the market for potash in the Republic of Malta are different from those in India,
where there is a domestic manufacturer and some international suppliers. Hence, it is submitted
that India, with its unique market for potash, constitutes a separate geographic market for the
purposes of the Competition Act, 2002.
13. It is submitted that the Competition Act provides certain factors that should be considered for
purposes of determining whether a combination would have the effect of or is likely to have an
appreciable adverse effect on competition (or AAEC).34 One of these factors is the market share,
in the relevant market, of the persons or enterprises in a combination, individually and as a
combination.35 It is respectfully put forth that in the instant case, the market share of the acquirer,
Bharat Public Ltd. stands at 65%. The target, Potcorp Public Ltd., is the only Indian
manufacturer of potash and sells to BPL and Amco India Ltd.36 In June 2012, it also supplied to
Americana Ltd.37 This means that Potcorp also enjoys a significant market share in the potash
market. Further, it can safely be concluded that as a combination as well, it shall enjoy a major
market share in the fertilizer and potash markets. Consequently, the parties enjoy a position
which is capable of significantly and sustainably increasing the prices or profit margins. This is
another one of the grounds to determine whether the combination is likely to have AAEC. 38
14. Further, in Airtours / First Choice39 the European Commission observed, “Furthermore, –
contrary to the apparent view of Airtours - it is not a necessary condition of collective
dominance for the oligopolists always to behave as if there were one or more explicit agreements
(e.g. to fix prices or capacity, or share the market) between them. It is sufficient that the merger
makes it rational for the oligopolists, in adapting themselves to market conditions, to act –
individually – in ways which will substantially reduce competition between them, and as a result
of which they may act, to an appreciable extent, independently of competitors, customers and
33
Refer factsheet, at p. 3.
34
Section 20(4), Competition Act.
35
Section 20(4)(h), Competition Act.
36
Refer factsheet, at p. 4.
37
Refer factsheet, at p. 4.
38
Section 20(4)(d), Competition Act.
39
Airtours / First Choice, 2000 OJ L93/1.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 19 of 30
consumers.”40 Hence, it is submitted that, the combination is likely to give the parties an
advantage over the competitors, and there is remains a possibility of a price hike by BPL. Hence,
it is submitted that the impugned combination is likely to have appreciable adverse effects on
competition.
15. It is further submitted that the EU Merger Regulations,41 lay down a test to determine whether
the ‘concentration’ is compatible with the common market, according to which, inter alia, the
market position of the undertakings concerned and their economic and financial power, the
alternatives available to suppliers and users, their access to supplies or markets, any legal or
other barriers to entry, etc shall be considered in order to appraise the effects of the concentration
in the market.42 A concentration between parties active in markets which are vertically linked
will not generally raise serious competition issues unless it threatens to raise entry barriers
through foreclosure of access to supplies or customers. The Commission therefore looks closely
at vertical integration issues where the parties have high market shares in affected markets.43
16. In its judgment in Grencor v. Commission,44 in relation to the combined market shares, the
Court said: “It is true that, in the context of oligopoly, the fact that the parties to the oligopoly
hold large market shares does not necessarily have the same significance, compared to the
analysis of an individual dominant position, with regard to the opportunities for those parties, as
a group, to act to a considerable extent independently of their competitors, their customers and,
ultimately, of consumers. Nevertheless, particularly in the case of a duopoly, a large market
share is, in the absence of evidence to the contrary, likewise a strong indication of the existence
of a collective dominant position.”45
17. It is submitted that some other factors which could be considered in weighing the effects of a
combination are the extent of effective competition is likely to sustain in the market, and extent
of barriers to entry.46 In Brown Shoe Company v. United States47, the Brown Shoe Company
40
Ibid.
41
COUNCIL REGULATION (EC) No 139/2004 of 20 January 2004 on the control of concentrations between
undertakings (the EC Merger Regulation).
42
Article 2(1) of EU Merger Regulations.
43
Bertelsmann/Kirch/Premiere, Case M.993 OJ 1999 L53/1.
44
Grencor v. Commission, Case T-102/96.
45
Ibid.
46
Section 20(4)(f) and Section 20(4)(b), Competition Act.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 20 of 30
was manufacturing shoes and wanted to integrate with a show retailer. This merger was held to
be illegal by the United States Supreme Court on the grounds that the share of the market
represented by the acquired retailer would no longer be accessible to competitors and that
consequently the merger severely reduced competition. Also, in the United States v. E.I.du Pont
de Nemours & Co.48, the du Pont acquired 23% of the stock interest in General Motors as a
result of which du Pont obtained an illegal preference over competitors in the sale of automotive
finishes and fabrics to General Motors. It was held to be violating Section 7 of the Clayton Act
as it tended to create a monopoly in a “line of commerce”.
18. It is submitted that in the instant case as well, the vertical integration between Bharat Public Ltd
and Potcorp has the potential to create a monopoly in the line of commerce. The acquisition of
Potcorp will definitely amount to a foreclosure of the Indian potash market for the appellants and
potential entrants in the raw material market. It is put forth that in January 2011, Lamco India
Ltd purchased potash from Potcorp to the tune of 20% of its total requirement. Thus, Lamco has,
been a customer of Potcorp in the past, and intended to fulfill more of its raw material
requirements by making purchases from the company. In fact, after the acquisition, i.e. in
December 2011, when Lamco India wanted to buy some more products from Potcorp, the
negotiations failed owing to a high price quoted by Potcorp. However, Potcorp has been selling
its products to Amco India Ltd and Americana Ltd. who do not compete with Bharat Public Ltd.,
as Amco India is an export – oriented unit, while Americana Ltd does not exist in the Indian
markets.49 Thus, from the abovementioned facts, BPL’s intention to monopolize the fertilizer
market is clearly evident.
19. In view of the abovementioned facts and authorities, it is submitted, that the acquisition of
Potcorp by Bharat Public Ltd. is likely to have appreciable adverse effect on competition in the
Indian market. Hence, it is reverentially submitted before this Hon’ble Court that the
combination entered into between BPL and Potcorp Ltd. should not be approved.
47
Brown Shoe Company v. United States, 370 US 294 (1961).
48
United States v. E.I.du Pont de Nemours & Co., 353 US 586 (1957)
49
Refer factsheet, at p. 2, 4.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 21 of 30
II. W H E T H E R A N C O A L T D IS J U S T I FI E D IN A L L E G IN G V IO L A T IO N O F
N A T IO N A L T R E A T M E N T , M FN A N D F A IR A N D E Q U IT A B L E T R E A T M E N T
U N D E R T H E B IT B E T W E E N R E PU B L IC O F IN D I A A N D R E PU B L IC O F M A L T A ?
It is humbly submitted before the Hon’ble Court that the present appeal has been filed by the
appellants, Ancoa Ltd. against the decision of the arbitration tribunal. It is most reverentially
submitted that under Article 3 of the agreement between the two countries, it is an obligation of
the host country to offer fair and equitable treatment at all times to the investments of the
investor from the other contracting party. Further, under Article 4 of the Agreement, it is a
contractual obligation of the Government of India to grant “no less favorable treatment” to the
investor of a contracting party than that accorded to domestic investors or to the investors of a
third state.50 In the present case, the government of India has violated the terms of the agreement
by not according fair and equitable treatment, national treatment and most favored nation
treatment.51
A. THE GOI IS BOUND TO RESPECT PRINCIPLES OF INTERNATIONAL LAW UNDER ARTICLE 51(C)
OF THE CONSTITUTION.
20. It is most respectfully submitted before the Hon’ble Supreme Court that of India that, Article
51(c) of the Constitution casts a duty on the State to endeavour to “foster respect for
international law and treaty obligations in the dealing of organized people with one another”.
The provisions contained in part IV shall not be enforceable by any court, but the principles laid
down therein are nevertheless fundamental in the governance of the country and it shall be the
duty of the state to apply these in making laws.52 In a catena of cases53, the Supreme Court has
issued various directions to the government for taking positive action to remove the grievances
50
The Agreement between Republic of India and Republic of Malta for Promotion and Protection of Investments,
hereinafter referred to as the BIT.
51
Refer sub-issue C and D of the Issue II of the Written Submissions from the Appellants.
52
Article 37, the Constitution of India; P.M Ashwathanarayana v. State of Karnataka, AIR 1989 SC 100;
Kesavnanda Bharti v. State of Kerala, AIR 1973 SC 1461.
53
Comptroller and Auditor General of India v. K S Jagannathan, AIR 1987 SC 537; Mukesh Advani v. State of MP,
AIR 1985 SC 1363; Bandhua Mukti Morcha v. Union of India, AIR 1984 SC 802; Sheela Barse v.State of
Maharashtra, AIR 1983 SC 378; Laxmi Kant Pandey v. Union of India, AIR 1987 SC 232.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 22 of 30
which had been caused by the non – implementation of these principles. 54 Thus it is the duty of
Government to not to act in contradiction to article 51(c) and respect the obligations under
international treaty. But in the present case the act of the government is in contradiction of article
51(c) and thus based upon the above judgments it is clear that now the directive principles are
enforceable therefore the Hon’ble Court can decide on the issue of India’s violation of
international principles and treaty obligations.
B. ANCOA LTD. IS JUSTIFIED IN ALLEGING VIOLATION OF NATIONAL TREATMENT AND FAIR
AND EQUITABLE TREATMENT.
21. The action of the GOI is violative of the standard of fair and equitable treatment under the
BIT.
21.1 It is humbly submitted before this Hon’ble Court that the principles that flow from obligation of
giving ‘fair and equitable treatment’ are “transparency, good faith, conduct that cannot be
arbitrary, grossly unfair, unjust, idiosyncratic, discriminatory, lacking in due process or
procedural propriety and respect of the investor’s reasonable and legitimate expectations.”55
‘Treatment’ is an expansive term, defined as “Conduct, action or behaviour towards a person”.56
21.2 It is further submitted that any action or omission attributable to the host State can become a
subject of a claim. 57 The text of the BIT and other sources of international law are important
tools for the application of these standards in a given case. 58 Interpretation of the treaty should be
done based on the ordinary meaning of the terms, in accordance with Article 31(1) of the Vienna
Convention of the Law of Treaties, 1969.59
54
U.B.S.E Board v. Hari Shankar, AIR 1979 SC 65 at 69; P.M Ashwathanarayana v. State of Karnataka, AIR 1989
SC 100.
55
Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. Mongolia., Award on
Jurisdiction and Liability, April 28, 2011; Fair and Equitable Treatment, 40, UNCTAD Series on Issues in
International Investment Agreements, UNCTAD, 1999.
56
The Oxford English Dictionary (1989), Second Edition, Clarendon Press, Oxford, vol. I, p. 602.
57
Saluka v. Czech Republic, UNCITRAL, Partial Award, 17 March 2006, para. 459; UNCTAD (2010), pp.15–17
58
Genin and others v. Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001, paragraph 367; ADF Group Inc.
v. United States, ICSID Case No. ARB (AF)/00/1, Award, 9 January 2003, para. 184; S.D. Myers, Inc. v. Canada,
UNCITRAL, First Partial Award, 13 November 2000, paras. 263-264.
59
MTD Equity Sdn. Bhd. & MTD Chile S.A. v. Chile, ICSID Case No. ARB/01/7, Award, 25 May 2004, para. 113;
Siemens v. Argentina, ICSID Case No. ARB/02/8, Award, 6 February 2007, para. 290.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 23 of 30
21.3 It is a widely accepted international principle that fair and equitable treatment involves a higher
standard of treatment rather than minimum standard of treatment,60 which is expected out of the
host state.61 Further, the international standard of fair and equitable treatment may be invoked
where national law does not provide for adequate guarantees of fair treatment in accordance
with generally shared values of substantial and procedural fairness and justice in respect of the
enjoyment of property and the normal conduct of business operations.”62
22. The legitimate expectations of Ancoa Ltd. have not been fulfilled.
22.1 It is reverentially submitted that the principle of “fair and equitable treatment” includes the
obligation not to upset an investor’s legitimate expectations,63 and the obligation to avoid
arbitrary government action.64 When the governments seeks foreign investment, and acts
intentionally so as to create expectations in potential investors with respect to particular
treatment or comportment, and then arbitrarily changes the rules of the game in a manner that
undermines the legitimate expectations of an investor, it would amount to the breach of those
legitimate expectations.65
22.2 It is further submitted that the fair and equitable standard requires that “governmental acts need
to conform to international standards of transparency, non arbitrariness, due process and
60
Cargill v. Mexico, ICSID Case No. ARB(AF)/05/2, Award, 18 September 2009, paras. 284–285
61
Compañiá de Aguas del Aconquija S.A. and Vivendi Universal v. Argentina, ICSID Case No. ARB/97/3, Award,
20 August 2007, paras. 7.4.6-7; Total S.A.v. Argentine Republic, ICSID Case No. ARB/04/1, December 27, 2010.
213; Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, June 21, 2011; Azurix v. Argentine
Republic, ICSID Case No. ARB/01/12, Award, July 14, 2006, para. 315.
62
Giorgio Sacerdoti, Bilateral Treaties and Multilateral Instruments on Investment Protection, 269 Recueil des
Cours (Hague Academy of International Law) 341–342 (1998).
63
Tecmed v. Mexico, ICSID Case No ARB (AF)/00/2, Award, 29 May 2003. at para. 154; Siemens A.G. v.
Argentina, ICSID Case No. ARB/02/08, Award, February 6, 2007, para. 299.
64
LG&E Energy Corp. v. Argentina, ICSID Case No. ARB/02/01, Decision on Liability (Oct. 3, 2006) ¶ 125; The
Mondev International v. United States of America tribunal, ICSID Case No. ARB(AF)/99/2, Award, October 11,
2002, para. 127
65
CMS Gas Transmission Co. v. Argentine Republic, Case ARB/01/8, Award (dispatched to the parties May 12,
2005); Tecmed at para. 154; Conclusions by M. Reisman and M.H. Arsanjani, The Question of Unilateral
Governmental Statements as Applicable Law in Investment Disputes, page 342
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 24 of 30
proportionality to the policy aims involved.”66 When this legitimate expectation is frustrated, it
may amount to breach of fair and equitable treatment standard under the BIT.67 Moreover, when
a host State’s conduct causes adverse effects to an investment,68 that is, reduces its economic
value, an investor may allege that the State violated legitimate expectations which the investor
had while making the investment.69 It is the obligation of the state to “ensure a stable and
predictable business framework for investment for investors to operate in, as has been held in a
catena of cases.70
22.3 Moreover, the objective laid down in the Preamble of the Agreement and the promise of
reciprocal protection and equal treatment to the investments of the investors, coupled with
liberalization policy of the Indian government created a legitimate expectation of high returns
from the investment. Since this expectation was breached, due to the unfair and arbitrary action
of waiving of loan of all Indian companies by the government, it amounted to breach of the
standard of fair and equitable treatment.
22.4 In the present case, since Ancoa Ltd. is a holder of 10% shares in Lamco India Ltd., its
investment is protected under the BIT. The treatment afforded to Lamco India is inequitable and
unfair and has affected Ancoa’s rights as an investor in India.
23. The act of GOI being arbitrary and unfair is violative of fair and equitable standards.
23.1 It is most respectfully submitted that the standard requires “treatment in an even-handed and just
manner, conducive to fostering the promotion of foreign investment”.71 It is critical of the
conduct that is arbitrary, grossly unfair, unjust or idiosyncratic or that “involves a lack of due
66
M. Waibel, Opening Pandora’s Box: Sovereign Bonds in International Arbitration, 101 American Journal of
International Law (2007) 711, 750
67
Alpha Project Holding Gmbh v. Ukraine, ICSID Case No. ARB/07/16, November 8, 2010.
68
Tecmed v. Mexico, ICSID Case No ARB (AF)/00/2, Award, 29 May 2003.
69
Fair and Equitable Treatment, UNCTAD Series on Issues in International Investment Agreements II, New York,
2012
70
Occidental Exploration and Production Co v. Ecuador, LCIA Case No. UN 3467, Final Award, 1 July 2004, para.
196; PSEG Global et al. v. Republic of Turkey, ICSID Case No. ARB/02/5, Award, 19 January 2007, paras. 252–
253
71
Supra MTD Equity Sdn. Bhd. Case, para. 113
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 25 of 30
process leading to an outcome which offends judicial propriety, and results in a manifest failure
of natural justice.72
23.2 It is further submitted that necessity and national emergency cannot be held to be defences, in a
case where the change in the policy of the government affected the investors’ business.73 The
standard to decide whether a judgment is fair and equitable is to some extent a flexible one and it
depends on the facts of the particular case and that must be adapted to the circumstances of each
case”.74
23.3 In the instant matter, the decision to grant waiver and support of BPL is an act which is arbitrary
and unfair, thereby violating fair and equitable treatment. Moreover, Ancoa Ltd. is a holder of
10% shares in Lamco India Ltd. and hence its investment is protected under the agreement. The
treatment afforded to Lamco is inequitable and unfair and has affected Ancoa’s rights as an
investor in India.
C. THE ALLEGATION OF VIOLATION OF NATIONAL TREATMENT IS JUSTIFIED.
24. The conduct of GOI is favourable to its own industries and violative of national treatment.
24.1 It is most respectfully submitted that the purpose of national treatment is to ensure a degree of
competitive equality between national and foreign investors.75 The phrase “national treatment”
has been defined as a treatment that is no less favorable than that given to domestic goods or
services. 76 This is also supported by the Preamble to the Agreement which itself recognizes,
“the encouragement and reciprocal protection under international agreement of such investment
as will be conducive to the stimulation of individual business initiatives…” Therefore, ensuring
same treatment as that of the domestic players is an obligation of the GoI to the investors of the
contracting party.
24.2 It is humbly put forth before this Hon’ble court that for violation of national treatment two
essentials need to be established. Firstly, it has to be decided whether the foreign investor and the
72
Waste Management, Inc. v. United Mexican States, ICSID Case No. ARB(AF)/00/3, Final Award, 30 April 2004,
para. 98 (as to infringement of “the minimum standard of treatment of fair and equitable treatment”).
73
CMS Gas Transmission Co. v. Argentine Republic, Case ARB/01/8, Award (dispatched to the parties May 12,
2005).
74
Mondev International Ltd. v. United States of America, ICSID Case No. ARB(AF)/99/2, Award, 11 October 2002,
para. 118, and Waste Management, Inc. v. United Mexican States, (supra), para. 99.
75
Occidental Exploration and Prod. Co. v. Ecuador, Case No. UN 3467 (London Ct. Int’l. Arb. July 1, 2004)
76
Black Law Dictionary, 7th edition.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 26 of 30
domestic investor are placed in a comparable setting, or, in “a like situation” or in “like
circumstances”. Secondly, it has to be determined whether the treatment accorded to the foreign
investor is at least as favourable as the treatment accorded to domestic investors.77
25. Despite being situated in ‘like circumstances’, BPL has been accorded more favourable
treatment than Lamco India Ltd.
25.1 It is humbly submitted that the concept of ‘like circumstances’ invites an examination of whether
a non-national investor complaining of less favourable treatment is in the same “sector” as the
national investor. The word ‘sector’ has a wide connotation that includes the concepts of
‘economic sector’ and ‘business sector’.78 ‘Like circumstances’ is the key operative element of
the non-discrimination standards, rather than a mere defense, exception, or justification against
national treatment obligations.79 As regards the expression ‘in like situations’, the comparison
between foreign-controlled enterprises established in a Member country and domestic enterprises
in that Member country is valid only if it is made between firms operating in the same sector.80
25.2 It is further submitted that the role of intent is not important in determining whether the host
government acted in favour of the national company.81 The practical requirement is the breach of
the obligation and not intent on the part of the government. It is also not necessary to establish
77
Rudolf Dolzer, Making the most of International Investment Agreements: A Common Agenda, National
Treatment: New Developments, 12 December 2005, OECD Headquarters, Paris.
78
S.D. Myers Inc. v. Canada, First Partial Award of November 13, 2000 (Hunter, Chiasson, Schwartz), 40 ILM
1408 (2001), para. 250; GAMI v. Mexico, Award of 15 November 2004 (Reisman, Lacarte Muró, Paulsson), 44 ILM
545 (2005); Marvin Feldman v. Mexico, Award of 16 December 2002 (Kerameus, Covarrubias Bravo, Gantz), 18
ICSID-Rev.- FILJ 488 (2003), para. 171; Occidental Exploration and Production Company v. Ecuador, (supra)
para.173.
79
Gami Inv. Inc. v. United Mexican States, NAFTA Ch. 11 Arb. Trib. Nov. 15, 2004, para. 114; Orellana, Marcos,
Investment Agreements & Sustainable Development: the Non-Discrimination Standards, Sustainable Development
Law & Policy 11, no. 3 (2011): 3-8, 35-36.
80
Fabrizio Pagani & Marie-France Houde, Most-Favored-Nation Treatment in International Investment Law, 16
OECD, Working Paper No. 2004/2, http://www.oecd.org/dataoecd/21/37/33773085.pdf; OECD, 1976 Declaration
and Decisions on International Investment and Multinational Enterprises, DAFFE/IME(2000)20 (Nov. 9, 2000),
http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=daffe/ime(2000)20&doclanguage=en; OECD,
Chairman’s Note on Environment and Related Matters and on Labour, at 5 DaFFe/mai(98)10 (mar. 9, 1998),
http://www1.oecd.org/daf/mai/pdf/ng/ng9810e.pdf.
81
S.D. Myers Inc. v. Canada, supra, para. 250.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 27 of 30
nationality-based discrimination.82 In the instant appeal, both the companies are in
manufacturing business of the fertilizers in India83 and hence fall within the same sector.
25.3 It is further submitted that in the present case, GoI waived loan liabilities of all companies in the
fertilizer sector which these companies might have towards either the Government of India or
towards any financial corporations or nationalized banks, thereby differentiating between Lamco
India Ltd. and BPL. It is submitted that the government of India wants to retain the dominance of
BPL, by giving it a more favourable treatment. Hence, the government has violated its obligation
to give national, and, fair and equitable treatment to Ancoa Ltd.
D. ANCOA LTD. IS JUSTIFIED IN ALLEGING VIOLATION OF MFN TREATMENT.
26. The act of GoI is violative of MFN treatment to Ancoa Ltd.
26.1 It is humbly submitted that MFN treatment is the central pillar of the international trading
system, and has been defined as the “cornerstone” of the World Trade Organization and the
“defining principle” of the General Agreement on Tariffs and Trade. 84
26.2 It is put forth that as per the agreement, the Host State has to accord investors and investments of
such investors, treatment which is no less favorable than that accorded to the third state.85 The
treatment refers to “all measures applying specifically to foreign investors (investment- specific
measures) or to measures of general application that regulate the economic and business activity
of the investor and his investment throughout the duration of the investment.”86
26.3 In the present case, Ancoa Ltd. is an ‘investor’ company from Malta and has invested in 10%
shares of Lamco India Ltd., both, the investments and the investor are covered within the
definition of the terms.87 Amco Ltd. is a subsidiary of a third state, U.S. and has been given
better and more preferential treatment as compared to Ancoa Ltd. For establishing Amco, the
82
Marvin Feldman v. Mexico, supra, para. 181l; Occidental Exploration and Production Company v. Ecuador,
Award of 1 July 2004 (Orrego Vicuna, Brower, Sweeney), para. 177
83
Refer factsheet, at p. 2
84
WTO Report of the Appellate Body, Canada – Autos, 31 May 2000, para. 69; WTO Report of the Appellate Body,
EC – Tariff Preferences, 7 April 2004, para. 104; WTO Report of the Appellate Body, United States – Section 211
Appropriations Act, 2 January 2002, para. 297
85
Article 4 of the Agreement
86
Most-Favoured Nation Treatment, UNCTAD Series on Issues in International Investment Agreements II,
UNCTAD, Geneva, 2010, available at http://unctad.org/en/docs/diaeia20101_en.pdf
87
Article 1, clause (c) and clause (b) of the Agreement
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 28 of 30
GoI has given location preferences with relevant considerations like abundant and cheap
workforce, as it has been established by the government in an industrially backward area.88
Hence the conduct of GoI is violative of MFN treatment as promised in the agreement between
the two states.
27. Both Ancoa Ltd. and Amco India Ltd. are situated in similar circumstances.
27.1 It is humbly submitted that “like circumstances” is the key operative element of the non-
discrimination standards, rather than a mere defense, exception, or justification against MFN
obligations.89 As regards the expression “in like situations”, the comparison between foreign-
controlled enterprises established in a Member country and domestic enterprises in that Member
country is valid only if it is made between firms operating in the same sector.90
28. Amco India Ltd. was granted “More Favourable Treatment”.
28.1 It is humbly submitted that in the facts of the present case, Ancoa Ltd. has not been accorded a
treatment which is “as favourable as”, the one accorded to investment by Amco India Ltd. This
is on three grounds. Firstly, Amco India Ltd., being an export oriented unit, is given an
opportunity to invest in India. Secondly, no agreement or BIT has been entered into between
India and US, therefore the Indian policy of foreign investment doesnot look upto the investors
from US. Thirdly, Ancoa Ltd which is incorporated in Malta holds no Indian investment as
compared to Amco India Ltd. in which 25% shares are held by Express Enterprises Ltd.
28.2 Hence, it can be concluded that Ancoa Ltd. is an important stakeholder in Lamco India Ltd.
Therefore, granting more favourable treatment to Amco Ltd., being a holder of Indian investment
through Express Enterprises, is violative of the MFN treatment acting as a fundamental breach of
the treaty obligations of the Union of India.
88
Refer factsheet, at p. 2
89
Gami Inv. Inc. v. United Mexican States, supra, para 114; Orellana, Marcos, “Investment Agreements &
Sustainable Development: the Non-Discrimination Standards,” Sustainable Development Law & Policy 11, no. 3
(2011): 3-8, 35-36.
90
Supra note 80.
-5th JUSTICE HIDAYATULLAH MEMORIAL NATIONAL MOOT COURT COMPETITION 2012-
Page 29 of 30
PRAYER FOR RELIEF
WHEREFORE IN THE LIGHT OF THE ISSUES RAISED, ARGUMENT ADVANCED, REASONS GIVEN AND
I. ALLOW THE ACQUISITION OF SHARES BY BHARAT PUBLIC LTD. IN POTCORP PUBLIC LTD.
II. HOLD THAT ANCOA LTD. IS JUSTIFIED IN ALLEGING VIOLATION OF NATIONAL TREATMENT,
FAIR AND EQUITABLE TREATMENT AND MOST FAVOURED NATION TREATMENT.
AND ANY OTHER RELIEF THAT THE HON’BLE SUPREME COURT MAY BE PLEASED TO GRANT IN THE