Government in a tizzy as Dabhol defence cracks

Indian Express, India

Government in a tizzy as Dabhol defence cracks

15 September 2004


NEW DELHI, SEPTEMBER 14: The newly-appointed solicitor firm in London, Evershed, has backed out of the Dabhol arbitration case at the last minute, leaving the Union government in a quandary.

The government has less than 15 days to file its defence statement before the Arbitral Tribunal in London on the Rs 26,000-crore case slapped on it by GE and Bechtel. The two companies have invoked the Indo-Mauritius Bilateral Investment Promotion and Protection Agreement (BIPA).

According to sources in the law ministry, Evershed - which was appointed just a fortnight ago in place of another UK-based law firm, DLA - has cited a ‘‘conflict of interest’’ as the primary reason for desiring to exit from the Indian team. ‘‘GE had earlier worked with Evershed on some cases and hence objected to its appointment by the GoI,’’ a source said.

India’s defence statement has to be filed by September 30 in the case, which pertains to arbitration proceedings. GE and Bechtel have claimed that a number of independent decisions by the Union government, the domestic lenders to Dabhol Power Company, the Maharashtra government and the Maharashtra State Electricity Board, cumulatively actually amounted to ‘‘measures of expropriation’’.

The Centre, the sources said, was now ‘‘desperately’’ trying to seek an extension from the Arbitral Tribunal in London. Any new solicitor will have to examine reams of documents and data.

While GE and Bechtel have invoked BIPA, signed between India and Mauritius, the Centre is also in receipt of several notices under its BIPA with Netherlands, the UK, OPIC of the USA, France, Switzerland and Austria.

After the new government came into power and Soli Sorabjee was replaced by Milon Banerjee as the new Attorney General, the entire legal team fighting the Dabhol Power Company (DPC) case changed. While Swarup & Co was replaced by Fox & Mandal as the internal legal advisors, DLA was replaced by Evershed as the Centre’s solicitors in London.