Ras Al Khaimah Investment Authority v Republic of India

For jurisdiction under an investment treaty, the court must interpret the treaty as a single combined operation, giving proper weight to text, context, object and purpose. Jurisdictional provisions are to be construed even-handedly, neither expansively for investors nor restrictively for States.

Where a treaty defines an investment as an asset and requires a measure to be applied directly to that investment, a holistic approach may identify the investment, but cannot convert non-assets into assets. Direct application is not confined to action directed at shares themselves. It may exist where governmental action targets the investment project in which the investor’s assets are invested. General measures with collateral effects may fall outside that concept.

RAKIA, an investment authority of Ras Al Khaimah, invested in an Indian aluminium project through shares and related interests in ANRAK Aluminium Ltd. The project depended on a bauxite supply agreement with Andhra Pradesh Mineral Development Corporation Ltd.

Following governmental action in 2016, the supply agreement was cancelled. RAKIA commenced UNCITRAL arbitration against India under the India-UAE bilateral investment treaty. The tribunal held that it lacked substantive jurisdiction because the relevant measures were applied directly only to the contracting companies, not to RAKIA’s shares.

RAKIA challenged that conclusion under section 67 of the Arbitration Act 1996. The central issues were the meaning of “Investment” and “Measure”, and whether the governmental action was applied directly to RAKIA’s investment.

Challenge allowed in relation to jurisdiction. The court held that the tribunal had jurisdiction, while expressing no view on the merits.

1. The court independently examined the tribunal’s jurisdiction. Section 67 of the Arbitration Act 1996 required the court to determine the jurisdictional issue for itself.
2. The India-UAE bilateral investment treaty was to be interpreted under Articles 31 and 32 of the Vienna Convention on the Law of Treaties. Treaty interpretation is a single combined operation involving ordinary meaning, context, object and purpose. Investment-treaty jurisdiction provisions should be construed even-handedly.
3. RAKIA’s invested assets were its US$42.5 million contribution, shares in ANRAK Aluminium Ltd and the pledge of those shares. The treaty’s holistic approach to identifying an investment did not permit work as a sponsor, rights under the memorandum of understanding, or an interest in the project generally to be treated as assets where they were not assets in law.
4. GOM 44, followed by the governmental direction and the show-cause and termination letters, amounted on the assumed facts to binding executive action intended to alter or end the bauxite supply agreement.
5. The tribunal wrongly treated direct application as requiring action directed at RAKIA’s shares themselves. The relevant distinction was between action targeted at the investment and action having only indirect or collateral effects. The governmental action targeted the proposed establishment of the alumina and aluminium industry, in which RAKIA’s assets were invested. Both application to the investment and directness were therefore established.
6. The tribunal’s conclusion that it lacked jurisdiction was set aside. The court stated that it would determine the consequential orders after further argument.

• UNCITRAL arbitral tribunal: In its Final Award dated 11 May 2022, the tribunal held that it lacked substantive jurisdiction and dismissed the claim.
• High Court (Commercial Court): The tribunal’s jurisdictional conclusion was challenged under section 67 of the Arbitration Act 1996. The court held that the tribunal had jurisdiction.