International Arbitration and State Immunity: Did ambiguity help India avoid an arbitral bullet?
On 31 January 2025, the Full Court of the Federal Court of Australia issued a decision in Republic of India v CCDM Holdings, LLC [2025] FCAFC. ?The case concerns the sovereign immunity of the Republic of India under the New York Convention, specifically regarding the enforcement of an arbitral award in Australia. In this significant decision, the court ruled that a waiver of sovereign immunity cannot be inferred merely from the ratification of the New York Convention.
In brief, the Republic of India was brought to arbitration for breaching a contract with another company. This contract was between an Indian state owned entity and an Indian subsidiary of a Mauritius-based company. After the applicant succeeded at arbitration it sought to enforce the award against India in Australia. India contested the enforcement, claiming sovereign immunity.
The Australian courts were tasked with deciding whether India could claim immunity. Initially, the primary judge ruled against India, asserting that India's ratification of the New York Convention implied a waiver of immunity. This conclusion appeared logical, particularly given similar cases such as Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l. HCA 11; 275 CLR 292. However, the Federal Court of Australia overturned this decision on appeal.
The key reasoning behind the court's decision was that any waiver of sovereign immunity under the New York Convention must be clear and unequivocal. In this case, the waiver was limited to disputes arising from commercial contracts under Indian law, and the dispute in question was held to be not commercial in that sense. The primary judge had erred by overlooking this distinction.
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This ruling establishes the important principle that a waiver of foreign state immunity must be:
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