Damage claim by RAKIA rejected by arbitration tribunal
Following several efforts for a negotiated settlement failed, the International Dispute Resolution Centre for Arbitration and Mediation (IDRC) based in London dismissed RAKIA’s claim for damages saying it lacked jurisdiction of Bilateral Investment Treaty (BIT) and issued orders to the complainant and respondent to share the expenses towards arbitration
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Visakhapatnam: In a shot in the arm, the Andhra Pradesh Government has scored a decisive victory: a $273 million damage claim by Ras-Al-Khaimah Investment Authority (RAKIA) over cancellation of Bauxite Supply Agreement (BSA) signed by AP Mineral Development Corporation in October, 2008.
Following MoU inked between AP Government, RAKIA and its Indian partner Penna Group in 2007, an understanding was arrived at to supply bauxite ore for the alumina refinery and smelter at Makavarapalem near Visakhapatnam. The BSA was to supply 224 million tonne from Jerrela Group of Mines located in the Chintapalli Reserve Forest. The agreement was scrapped during TDP rule in April 2016 alleging irregularities in the allotment.
The international arbitration notice was served citing violation of the provisions of UN-UAE Commission on International Trade Law Rules, India-UAE Bilateral Investment Protection Agreement and Bauxite Supply Agreement signed with APMDC in October, 2008.
Following several efforts for a negotiated settlement failed, the International Dispute Resolution Centre for Arbitration and Mediation (IDRC) based in London dismissed RAKIA's claim for damages saying it lacked jurisdiction of Bilateral Investment Treaty (BIT) and issued orders to the complainant and respondent to share the expenses towards arbitration.
In a tweet, Principal Secretary and senior IAS officer Gopal Krishna Dwivedi said "Government of India (GoI) and Government of AP win case in International Arbitration Tribunal, London against RAKIA. It's a great achievement for the State and APMDC." He congratulated the whole team of GoI and Government of AP who worked hard for it.
When contacted, an aide of Chief Minister YS Jagan Mohan Reddy, told Bizz Buzz that though the damage claim was turned down under technical grounds, it came as a big relief to the government. He said the government is committed not to allow bauxite mining against the wishes of the tribals.
The project raised a public outcry with stiff opposition from civil right and tribal activists on the ground of violation of Section 1/70 of Land Transfer (Regulation) Act which prohibits land transactions between tribals and non-tribals in the scheduled areas to prevent exploitation of hapless tribals by non-tribals. The regulation is also popular as Samata order following the Supreme Court's judgment in the writ filed by Samata, an NGO against mining lease given by APMDC in Araku area to Birla Periclase in 1997.
The alumina refinery and smelter plant project under the aegis of Anrak Aluminium Limited (AAL) with 13 per cent equity by RAKIA and 87 per cent by Penna Group ran into trouble following the loan taken for construction of 2.5 million tonne refinery at Makavarapalem becoming non-functional for want of bauxite ore-the main raw material for production of aluminium. The loan amount of about Rs 4,000 crore which was taken from a consortium of banks was later referred to NCLT where an understanding was reached for repayment. The refinery also recently started production with the management's decision to import the raw material.
