Frantic Effort in 2020 to Pass “Devas Amendment” to Arbitration Law Results in a Fraudulent Set Aside by Delhi High Court
Politics again trumped rule of law as the Delhi High Court in August unsurprisingly ruled to set aside Devas’ $1.3B international arbitration award on the bogus grounds of “patent illegality and fraud”.
The ruling handed down by Modi’s subservient judiciary is yet another in a long line of fraudulent and targeted attacks on businesses and individuals, all engineered by the autocratic regime that is methodically destroying the rule of law in India.
The judge himself acknowledged that there were “limited” grounds for a successful set aside, but still chose to bow to the domestic political winds and help the Modi regime evade its international responsibilities.
In a statement following the decision, Matthew D. McGill, Lead Counsel to Devas Shareholders and Partner at Gibson, Dunn & Crutcher, called the ruling a “mockery of the international arbitration system…” and warned that “India’s courts are now willing accomplices in the government’s scheme to use baseless fraud allegations and innuendo to evade multiple international arbitration judgments”
The “Devas Amendment”
On November 4, 2020, the U.S. District Court for the Western District of Washington formally entered judgment recognizing the $1.3 billion ICC award in favor of Devas, rejecting all of India’s hollow arguments against it. That same day, the Modi government passed a “Devas Amendment” to India’s arbitration law enabling the country’s politically subservient courts to unconditionally stay any arbitration award “where a prima-facie case of fraud or corruption has been made” regarding an underlying contract, with retroactive effect.
The “surprise” amendment was immediately flagged as “suspicious” by fair-minded legal observers, who pointed out in the media the obvious motive – a frame up, so that the Delhi High Court would have a legal pretext to set aside the Devas award.
Note that no actual proof of fraud or corruption is required – only a “prima-facie” case in the eyes of a judge whose career depends upon pleasing the Modi regime. This contrivance recalled memories of Modi’s illegal retrospective tax that targeted Britain’s Cairn Energy, which led to a $1.6 billion international arbitration award in Cairn’s favor – ultimately embarrassing the Modi regime and exposing India as a dangerous place for investors.
The “War Footing” Memo
Modi & Co. learned from the Cairn fiasco, and when the U.S. court dismissed all of India’s failed arguments and entered the Devas award on November 4, 2020, the government went on the attack.
On the same day that the government passed their “Devas Amendment” to the arbitration law, Finance Minister Nirmala Sitharaman spearheaded an inter-ministerial committee on a “war footing” to “expedite statutory proceedings” and investigations on all fronts “to reach finality and conclusion” in contrived prosecutions against Devas. Since the law now said that mere allegations of fraud would enable the court to stay an award, Sitharaman utilized agencies within her ministry, specifically the Enforcement Directorate, to fabricate such allegations.
Set Aside is Nothing More than Another Fraud
The set aside ruling handed down by the Delhi High Court represents nothing more than a contrivance, debasing the credibility of India’s judiciary merely to avoid the financial consequences of repudiating a commercial contract.
For India, the set aside will prove to be a Pyrrhic victory. As McGill noted in his response to the Delhi High Court Ruling, the Modi regime will now face the consequences of such thuggish behavior in the form of a new arbitration claim that will expose the Indian government’s dishonesty before a new, impartial international tribunal.
Until then, McGill reminds Modi, Sitharaman and their political cronies, “Devas shareholders will not waver or be deterred from pursuing their rightful claims in every court around the world until the awards are fully satisfied.” Potential investors in India should beware that notwithstanding the country’s apparent commercial attractions, the Cairn, Vodaphone and especially now the Devas case plainly demonstrate the Modi regime’s astonishing readiness to sacrifice the country’s institutions for unfair and comparatively modest financial gains.