RESPONDENT MEMORANDUM file · Web viewRESPONDENT MEMORANDUM

I TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE)

2018

MEMORIAL FOR THE RESPONDENT

IN THE MATTER OF APPEAL BEFORE THE HON'BLE SUPREME COURT OF

INDIANA BETWEEN:

STATE OF DELAWARE AND NORTH ATLANTIC EDISON INC ... APPELLANT

V.

THERMAL POWER CORPORATION (TPC) ... RESPONDENT

II TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

TABLE OF CONTENTS

INDEX OF AUTHORITIES.........................................................................................................................V

STATUTES...........................................................................................................................................VIII

BOOKS.................................................................................................................................................VIII

MISCELLANEOUS................................................................................................................................IX

STATEMENT OF JURISDICTION...........................................................................................................XI

QUESTIONS PRESENTED......................................................................................................................XII

Whether the appellant (State of Delaware) justified in seeking for the cancellation of the long term purchase agreement with Thermal Power corporation?.........................................................................XII

Whether North Atlantic Edison Inc is correct in approaching through UK government to seek relief under Bilateral Agreements?..................................................................................................................XII

Whether state government has any other option to deal with the situation rather than cancelling the long term agreements?....................................................................................................................................XII

STATEMENT OF FACTS.......................................................................................................................XIII

SUMMARY OF PLEADINGS...............................................................................................................XVII

1. WHETHER THE APPELLANT JUSTIFIED IN SEEKING FOR THE CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT WITH THERMAL POWER CORPORATION?XVII

2. WHETHER NORTH ATLANTIC EDISON INC IS CORRECT IN APPROACHING THROUGH UK GOVERNMENT TO SEEK RELIEF UNDER BILATERAL AGREEMENTS?.......................XVII

3. WHETHER THE STATE GOVERNMENT HAS ANY OTHER OPTION TO DEAL WITH THE SITUATION RATHER THAN CANCELLING THE LONG TERM AGREEMENTS?................XVIII

PLEADINGS.................................................................................................................................................1

WHETHER THE APPELLANT JUSTIFIED IN SEEKING FOR THE CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT WITH THERMAL POWER CORPORATION?...............1

I. THAT UNILATERAL TERMINATION SHALL CONSTITUTE BREACH OF PPA:.............1

II. THAT PPA IS IN ACCORDANCE NATIONAL ELECTRICITY POLICY:.............................3

III. THAT TARIFF IS IN ACCORDANCE WITH NATIONAL TARIFF POLICY:...................5

IV. THAT THE AGREEMENT IS NOT IN CONTRAVENTION OF SECTION 60:..................8

V. That The Facts Alleged by Appellants in Support of Their Claim under Article 3(2) of BIPA Are Not Capable of Falling Within the Scope of That Provision........................................................18

VI. THAT THE FACTS ALLEGED BY APPELLANTS IN SUPPORT OF THEIR CLAIM UNDER ARTICLE 4(1) OF BIPA ARE NOT CAPABLE OF FALLING WITHIN THE SCOPE OF THAT PROVISION.............................................................................................................................19

III TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

VII. THAT THE FACTS ALLEGED BY APPELLANTS IN SUPPORT OF THEIR CLAIM UNDER ARTICLE 5 OF BIPA ARE NOT CAPABLE OF FALLING WITHIN THE SCOPE OF THAT PROVISION.............................................................................................................................20

VIII. THAT THE CLAIMS OF APPELLANTS IN SUPPORT OF THEIR CLAIM UNDER ARTICLE 3(3) OF BIPA ARE NOT CAPABLE OF FALLING WITHIN THE SCOPE OF THAT PROVISION........................................................................................................................................21

WHETHER THE STATE GOVERNMENT HAS ANY OTHER OPTION TO DEAL WITH THE SITUATION RATHER THAN CANCELLING THE LONG TERM AGREEMENTS?......................24

II. RENEGOTIATING THE TARIFF IS AGAINST THE SANCTITY OF THE PPA-................25

PRAYER......................................................................................................................................................30

IV TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

LIST OF ABBREVIATIONS

DEB : Delaware Electricity Board

PPA : Power Purchase Agreement

AT&C : Aggregate Technical & Commercial

CERC : Central Electricity Regulatory Commission

SERC : State Electricity Regulatory Commission

DISCOMS : Distribution Companies

EA : Electricity Act

GENCO’s : Generation Companies

CCI : Competition Commission of India

BIT : Bilateral Investment Treaty

ICSID : International Centre for Settlement of Investment Disputes

VCLT : Vienna Convention on the Law of Treaties,

UNCITIRAL : United Nations Commission on International Trade Law

ARSIWA : Responsibility of States for Internationally Wrongful Acts

APTEL : Appellate Tribunal For Electricity

SCADA : The Supervisory Control And Data Acquisition

FET : Fair and Equitable Treatment

UNCTAD : United Nations Conference on Trade and Development

V TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

INDEX OF AUTHORITIES

LIST OF CASES:

1. British Caribbean Bank Limited, [2013] CCJ 4 (AJ)……………………………………30

2. Calcutta High Court in The Board of Trustees of the Port of Kolkata v. Louis Dreyfus

Armatures SAS & Ors ,2014 SCC OnLine Cal 17695……………………….28

3. Chloro Controls India Private Limited Vs. Severn Trent Water Purification Inc. & Others,

(2013) 1 SCC 641………………………………………………………………28

4. Chloro Controls India Private Limited Vs. Severn Trent Water Purification Inc. & Others,

2009 SCC OnLine Del 3780……………………………………………………28

5. Compañiá de Aguas del Aconquija & Vivendi Universal (formerly Compagnie Générale

des Eaux) v. Argentine Republic………………………………………………………..31

6. Dhulabhai Vs. State of M.P. 1968 (3) SCR 662]………………………………………29

7. Lalji Raja and Sons Vs. Firm Hansraj Nathuram ,(1971) 1 SCC 721………………31

8. Modi Entertainment Network, (2003) 4 SCC 341…………………………………….29

9. Orascom TMT Investments S.a r.l. v. People’s Democratic Republic of Algeria [ICSID

Case No.ARB/12/35, Award dated 31st May 2017……………………………………..28

10. R. Viswanathan and Others vs. Rukn-ul-Mulk Syed Abdul Wajid (Since deceased) &

Others.,(1963) 3 SCR 22……………………………………………………………..29

11. Republic of Ecuador v. United States of America (PCA Case No. 2012-5)…………….32

12. S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26. ………………….…….27

13. See Christoph Schreuer, The ICSID Convention: A Commentary 140 (2001) (Resp. Auth.

32); see also Fedax N.V. v. Bolivarian Republic of Venezuela (Decision on Jurisdiction),

ICSID Case No. ARB/96/3 (July 11, 1997)…………………………………………….32

14. South West Africa (Ethiopia v. South Africa; Liberia v. South Africa), Preliminary

Objections, Judgment of 21 December 1962, ICJ Reports 1962, p. 319 (p. 328)……….32

VI TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

15. South West Africa (Ethiopia v. South Africa; Liberia v. South Africa), Preliminary

Objections, Judgment of 21 December 1962, ICJ Reports 1962, p. 319 (p. 328)……….32

16. The Mavrommatis Palestine Concessions, Judgment of 30 August 1924 (Objection to the

Jurisdiction of the Court), PCIJ 1924 (Series A, No. 2), p. 11…………………………..32

17. Salini v. Morocco, ICSID case NO. ARB/00/4, Decision on Jurisdiction, 23 July 2001..32

18. Romak S.A v. Uzbekistan, PCA Case No. AA280, paras 180 and 207…………..32

19.Phoenix action v. Republic (n.151)………………………………………………..33

20. See Liberian Eastern Timber Corp. v. Republic of Liberia (Award), ICSID Case No.

ARB/83/2 (Mar. 31, 1986), 2 ICSID Rep. 343, 350 (1994) ……………………………33

21. CME Czech Republic B.V. v. Czech Republic (Separate Opinion of Ian Brownlie Q.C.)

UNCITRAL (Mar. 14, 2003), 34 (Resp. Auth. 9)……………………………………….34

22.Malaysian Historical Salvors SDN, BHD v. Malaysia (Award on Jurisdiction), ICSID

Case No. ARB/05/10 (May 17, 2007)…………………………………………………….34

23.Joy Mining v. Egypt (n.200) para 57………………………………………………….34

24. See Alex Genin, Eastern Credit Ltd., Inc and AS Baltoil v. Estonia. ICSID Case No.

ARB/99/2, Award 25 June 2001, para 367……………………………………………….35

25. BIVAC BV V. Paraguay, ICSID Case No ARB/07/9………………………………..35

26. Joseph Charles Lemire v. Ukraine, ICSID Case No. ARB/06/18, Award, 28 March 2011,

para 43……………………………………………………………………………………….35

27. Plama v. Bulgaria (n.22) para 218……………………………………………………35

28. Glamis Gold v. USA (n.30) para 766…………………………………………………35

29. Franck Charles Arif v. Moldova (n.34) para. 539…………………………………….35

30. See Walter Bau v. Thailand (n.125) para 12.31………………………………………36

31. Saluka v. Czech Republic (n.12) para 304,305,306…….…………………………….37

32. Pope & Talbot Inc vs Canada, UNCITRAL, Award on 10 April 2001, para 75…….37

33.United Parcel Service of America Inc vs Canada UNCITRAL, Award on 24 May 2007,

para 99………………………………………………………………………………………38

34.BG Group Plc v. Argentina (n.58)…………………………………………………….38

35.El Paso Energy International Company v. Argentina (n.121)…………………………38

36. Marvin Feldman v. Mexico (n101), para 103…………………………………………39

VII TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

37. SGS Société Générale de Surveillance, S.A. v. Pakistan, ICSID case No ARB/01/13,

decision on Jurisdiction, 6 August 2003, 18 ICSID rev- F.I.L.J. 307 (2003)…………….39

38. Joy Mining Machinery Limited v. The Arabic Republic of Egypt, Award on Jurisdiction,

ICSID case No. ARB/03/11, August 6, 2004………………………………………………40

39. Salini Construttori S.p.A. and Italstrade S.p.A v. The Hashemite Kindgom of Jordan,

ICSID case No. ARB/02/13), Decision on Jurisdiction, 29 November, 2004 available at

http://www.worldbank.org/icsid/cases/salini-decision.pdf.............................................40

40. El Paso Energy International Company v. The Argentine Republic, ICSID Case No.

ARB/03/15,-Decision on Jurisdiction, 27 April 2006……………………………………..40

41. Pan American Energy LLC and BP Argentina Exploration Company v. Argentine

Republic, ICSID Case No. ARB/03/13 and BP America Production Co. and Others v.

Argentine Republic, ICSID Case No. ARB/04/8; Decision on Preliminary Objections, 27

July 2006……………………………………………………………………………………41

42. CMS v. Republic of Argentina, ICSID case no. ARB/01/8, Award 12 May 2005…..41

43. Vidya Singh vs Life Insurance Corporation (AIR 2004 P H 359)…………………..41

44. Tarun Bhargava vs State of Haryana and Anr. (2003 (2) ARBLR 645 P H)………..41

45. Harima Sipal and Ors. Vs Hari Krishna Joshi and Anr. (2007 ACJ 1256)…………..41

46. Center of Indian Trade Unions and Another vs Union of India ,AIR 1997 Bom 79….41

47. Adani Power Limited vs. Uttar Haryana Bijli Vidyut Nigam Limited and ors………42

48. Coastal Gujarat Power Limited vs Gujarat Urja Vikas Nigam Limited and Ors……..42

50. Coastal Gujarat Power Limited v. Western Regional Load Dispatch Centre Petition No.

231/MP/2015………………………………………………………………………………..18

51.Adani Power Limited v. Gujarat Electricity Regulatory Commission and Ors ,Appeal

No.184 of 2010……………………………………………………………………………..19

52. Indian Oil Corporation v. Nilofer Siddiqui (2015) 16 SCC 125……………………..19

53. BSES Yamuna Power Limited v. Central Electricity Regulatory Commission 2014 SCC

Online APTEL 46…………………………………………………………………………..19

54. India Financial Assn., Seventh Day Adventists v. M.A Unneerikutty,(2006) 6 SCC

351………………………………………………………………………………………….20

55. Reliance Infrastructure Ltd. v. MERC Appeal no. 115 of 2011……………………….20

http://www.worldbank.org/icsid/cases/salini-decision.pdf

VIII TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

56. Adani Power Ltd. v. Uttar Haryana Bijli Vitaran Nigam Ltd ,Petition No:

155/MP/2012……………………………………………………………………………….21

57. All India Power Engineer Federation v. Sasan Power Ltd ,Civil Appeal Nos.5881-5882

of 2016……………………………………………………………………………………..23

58. In Re: TPDDL, Case no. 20 of 2017…………………………………………………..23

59. Karnataka Power Transmission Company v. R.K. Powergen Pvt. Ltd.,ILR 2005 KAR

5468, 2006 (2) KarLJ 608…………………………………………………………………..24

60Anand Prakash Agarwal v. Dakshin Haryana Bijli Vitran Nigam Ltd ,Appeal No. 33 of

2016………………………………………………………………………………………….25

61. A.P. TRANSCO v. Sai Renewable Power (2011) 11 SCC 34………………………..25

62. Association of Power Producers, New Delhi v. NTPC, PETITION NO. 125/

MP/2011……………………………………………………………………………………25

63. Ramakant Kini v. Hiranandani Hospital, Powai ,Appeal no. 19 of 2014……………26

64. Excise Commissioner v. Issac Peter ,(1994) 4 SCC 104………………………………26

65. Indian Oil Corporation Limited v. Gujarat State Petroleum Corporation Limited ,2014

ELR (APTEL) 579…………………………………………………………………………26

STATUTES 1. The Electricity Act, 2003.

2. The Competition Act, 2002.

3. The National Electricity Policy.

4. Vienna Convention on the Law of Treaties.

5. Responsibility of States for Internationally Wrongful Acts.

6. UNCITRAL Arbitration Rules 1976.

7. Constitution of India,1950.

BOOKS 1. BARUCHA, NAUSHIR, “GUIDE TO ELECTRICITY LAWS”.

2. BASU, “COMMENTARY ON ELECTRICITY LAWS OF INDIA”.

3. BECK, HART, NOMOS, “INTERNATIONAL COMMERCIAL ARBITRATION”.

4. BECK, HART, NOMOS, “INTERNATIONAL INVESTMENT LAW”.

IX TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

5. CHATTERJEE’S, “THE ELECTRICITY LAWS OF INDIA”.

6. CHOUKROUNE, LAILA, “JUDGING THE STATE IN INTERNATIONAL TRADE

AND INVESTMENT LAW”.

7. COLLINS, DAVID,“AN INTRODUCTION TO INTERNATIONAL INVESTMENT

LAW”.

8. GAZZINI, TARCISIO, “INJTERPRETATION OF INTERNATIONAL INVESTMENT

TREATIES”.

9. SCHILL STEPHEN, THE MULTILATERALIZATION OF INTERNATIONAL

INVESTMENT LAW.

10. SCHILL, STEPHEN W., “ENABLING PRIVATE ORDERING: FUNCTION, SCOPE

AND EFFECT OF UMBRELLA CLAUSES IN INTERNATIONAL INVESTMENT

TREATIES.” 18 MINN. J. INT’L L.1 (2009), P. 35.

11. TANEJA, RAMNI, “FOREIGN DIRECT INVESTMENT AND GLOBALISATION”.

12. TWEDDALE, TWEDDALE, “ARBITRATION OF COMMERCIAL DISPUTES”.

MISCELLANEOUS

1. Agreement between the Government of the United Kingdom of Great Britain and Northern

Ireland and the Government of the Republic of India for the Promotion and Protection of

Investments, 1994.

10. Ankita Gupta et. al., Effectiveness of High Voltage in Distribution System: High Voltage

Distribution System, IOSR Journal of Electrical and Electronics Engineering, Volume 1, Issue 5

(July-Aug. 2012), PP 34-38 (www.iosrjournals.org).

11. Revised Tariff Policy, Notified on 28th January 2018.

12. Amulya K.N. Reddy and Gladys D. Sumithra, Karnataka’s Power Sector: Some

Revelations, Economic and Political Weekly, Vol. 32, No. 12 (Mar. 22-28, 1997), pp. 585-600.

13. Amulya K.N. Reddy and Gladys D. Sumithra, Karnataka’s Power Sector: Some Revelations,

Economic and Political Weekly, Vol. 32, No. 12 (Mar. 22-28, 1997), pp. 585-600.

14. Ministry of Power, National Tariff Policy, 28th January 2016.

http://www.iosrjournals.org/

X TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

15. Delhi Electricity Regulatory Commission, Approach Paper on Tariff Rationalization,

February 2018, http://www.derc.gov.in/Public%20Notice/Tariff%20Rationalization/Approach

%20Paper%20on%20Tariff%20Rationalisation.pdf.

16.More Power to India World Bank document S Pargal Available at

http://dx.doi.org/10.1596/978-1-4648-0233-1.

17. Approach Paper on Tariff Rationalization Available at http://www.derc.gov.in/Public

%20Notice/Tariff%20Rationalization/Approach%20Paper%20on%20Tariff

%20Rationalisation.pdf

18. Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations,

2014 Statement of Reasons Available athttp://www.cercind.gov.in/2014/regulation/sor96.pdf.

2. Bernasconi-Osterwalder, N. (2014), State-State Dispute Settlement Clause in Investment

Treaties (IISD Best Practices Series). Geneva and Winnipeg: IISD. Retrieved from

http://www.iisd.org/sites/default/files/publications/ best-practices-state-state-dispute-settlement-

investment-treaties.pdf.

3. Christoph Schreuer, ‘Travelling the BIT route: Of Waiting Periods, Umbrella clauses and

Forks in Road’ (2004) 5 JWI 231-256.

4. Christoph Schreuer, The ICSID Convention: A Commentary 140 (2001) (Resp. Auth. 32).

5. Mark Kantor, ‘Fair and Equitable Treatment: Echoes of FDR’s Court Packing Plan in the

International Law Approach towards Regulatory Expropriation’ (2006) 5 LPICT 231-256.

6. Niti Aayog, Draft National Energy Policy, Version as on 27.06.2017.

7. Santosh B Belekar et. al., PLC and SCADA based distribution and control, Multidisciplinary

Journal of Research in Engineering and Technology Volume 1, Issue 1 (April 2014) Pg. 105-

110.

8. Poonam Shivaji et al., Wireless SCADA: Review Paper, International Journal for Scientific

Research and Development, Volume 5 Issue 11 Pg. 751-753.

9. Tarun Agarwal, Scada Applications in Power Sector,Edgefx Technologies Pvt. Ltd.,Online:

https://www.edgefx.in/scada-applications-in-power-system.

https://www.edgefx.in/scada-applications-in-power-system

http://www.cercind.gov.in/2014/regulation/sor96.pdf

http://www.derc.gov.in/Public%20Notice/Tariff%20Rationalization/Approach%20Paper%20on%20Tariff%20Rationalisation.pdf



http://dx.doi.org/10.1596/978-1-4648-0233-1



XI TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

STATEMENT OF JURISDICTION

Thermal Power Corporation on its own behalf most respectfullysubmit to jurisdiction of this

Hon’ble Supreme Court of Indiana under Section 125 of theElectricity Act, 2003.

Section 125 of the Act reads as follows:

125. Appeal to Supreme Court:

Any person aggrieved by any decision or order of the Appellate Tribunal, may, file an appeal to

the Supreme Court within sixty days from the date of communication of the decision or order of

the Appellate Tribunal, to him, on any one or more of the grounds specified in section 100 of the

Code of Civil Procedure,1908:

Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by

sufficient cause from filing the appeal within the said period, allow it to be filed within a further

period not exceeding sixty days.

XII TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

QUESTIONS PRESENTED

-I-

Whether the appellant (State of Delaware) justified in seeking for the cancellation of the long term purchase agreement with Thermal Power

corporation?

-II-

Whether North Atlantic Edison Inc is correct in approaching through UK government to seek relief under Bilateral Agreements?

-III-

Whether state government has any other option to deal with the situation rather than cancelling the long term agreements?

XIII TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

STATEMENT OF FACTS

A. THE DISPUTE

1. Beginning in 2003, the Republic initiated a process of privatizing certain state-owned

enterprises. This process included representations and promises to foreign investors to

entice and encourage them to invest in the Republic. These representations and

promises were made by and with the approval of the Republic and could only be

delivered by the Republic. Indeed, the then Government, acknowledged the

Republic's continuing responsibility for actions concerning the electricity sector when

it was observed that "the government has to bear the problems of the electricity sector

because the state has legal continuity". Delaware Electricity Board (DEB) was a state

run electricity distribution firm, which was low in operating efficiency and was

running in heavy losses. So it was disbanded in 2003, as part of reforms in the power

sector, to increase the efficiency of power distribution and to ensure uninterrupted

power supply in the city.

2. In 2003, the Government opened a competitive bidding under which the Delaware

Electricity Board was privatized and was taken over by North Atlantic Edison Inc, an

UK based energy company and this bidding process promised a "regulatory

framework, which will be known by the pre-qualified bidders, and will be the

guarantee of the investments in the sector.

XIV TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

3. The Government embarked on a bold initiative to restructure the entire electricity

sector. The primary goals of the new structure are to create a competitive market in

generation, create a rational regulatory framework for distribution, and provide

capital needed for needed improvements to the system. The Republic also declared

that the purpose the tariff setting process was to "provide a simplified regulatory

scheme and tariff setting process which limits the discretionary role of the

Government through the establishment of objective criteria for setting prices in a

manner which results in an economically efficient allocation of resources within the

electricity sector."

4. In the PPA, the Republic specifically declared that the applicable tariffs would "be

calculated in accordance with the regulatory framework." The Republic provided

investors with specific details regarding the tariff structure established by the legal

and regulatory framework which the investors were well aware about: The current

tariff structure is based on the internal regulations of PPA and it contains the different

types of tariffs, consumption charges and adjustment formulas.

5. In its representations to investors, the Republic also repeatedly projected that by

today, AT&C losses would fall to a small fraction of their historically high levels. For

example as per the Government Report, the AT&C Losses have come down from

53% to 9% from 2003 to 2016, which as promised happened. Deficit situation in

Delaware has improved in terms of both peak and energy deficit. Peak deficit has

reduced from 9.2 per cent in 2002 to 0.1 percent in 2015. Base deficit has also

reduced from 1.9 per cent in 2002 to 0.3 percent in 2015. However, government have

tended to disadvantage private discom by freezing tariffs for period resulting in

accumulations of regulatory assets. Power purchase cost has increased threefold since

the electricity distribution has been privatized, whereas the tariffs has risen only 90%

so far.

6. Before privatization, Delaware Electricity Board had entered into 30 year long power

purchase agreement with Thermal Power Corporation, however, the private power

XV TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

distribution companies were made to comply with various pacts that Delaware

Electricity Board had signed with central government entities.

7. The Republic has consistently represented that the purpose of the tariff structure was

to facilitate a permanent reform in the sector, and that failure to implement a

complete pass-through of costs is temporary. Achieving a complete pass-through of

costs has repeatedly been represented as a central feature of the new framework.

8. During the privatization process, the Republic recognized the problems caused by

electricity theft and the necessity for enforcement of the law to effectively manage the

electricity sector. Likewise, representatives of the Republic have made numerous

public statements regarding the necessity for and importance of preventing the theft

of electricity as well as the problems created due to the Republic's failure to apply the

"rules of the game" that the Republic approved and implemented.

B. THE CREATION OF NORTH ATLANTIC EDISON INC. AND ITS

RELATIONSHIP WITH THE REPUBLIC

9. The purpose of the Republic's promulgation of the laws, resolutions and entities

described above was to establish a predictable regulatory system to attract the funds

needed for the privatization of the Republic's electricity system by foreign investors

in 2003 and to maintain a stable framework for the electricity sector's viability.

10. Pursuant to the Reform Law and following the directives issued by Government, the

DEB formed different subsidiaries. The DEB then proceeded to transfer all of its

distribution assets under the competitive bidding. All generation and transmission

assets remained with DEB.

11. The Republic invited foreign private companies to participate in the privatization by

contributing financial capital to the new electricity distribution companies. In

XVI TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

exchange for their investment, the private investors would receive 51% of the

outstanding common stock of each company.

12. The private investors that invested in the electricity industry were to be given

management control over the newly-formed electricity companies through special

provisions in the companies' by-laws and through the execution of management

agreements between each of the subsidiaries and the individual foreign investors.

C. THE REPUBLIC'S AGREEMENTS WITH NORTH ATLANTIC EDISON INC.

13. In 2003, the Government announced that North Atlantic Edison Inc., a UK based

Company was the winners of the competitive bidding for the selection of the private.

14. The basic contracts are:

a. the PPA, which was signed between the Republic of Indiana and the North Atlantic

Edison Inc.

b. the Privatization Agreement signed between the Republic of Indiana and the North

Atlantic Edison Inc.

15. The Basic Contracts reflected the fulfilment of the Republic's stated public policy to

privatize the electricity sector by forming joint ventures with foreign investors, to

establish a new long-term structure for the electricity sector, and to guarantee certain

rights to North Atlantic Edison Inc.

D. THE POWER PURCHASE AGREEMENT

16. In 2003, the DEB and North Atlantic Edison Inc. executed the Power Purchase

Agreement. In the PPA, the Republic declared that, through the Government, it

intended to: as a matter of policy, involve the private sector in the restructuring and

operation of the electricity distribution permitting new private sector capital to

rehabilitate and extend the distribution system, which creates a competitive electricity

market that awards efficiency and good management.

XVII TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE)

2018

17. In the PPA, the Republic agreed to establish North Atlantic Edison Inc. and transfer

to it certain electricity distribution assets, including operating licenses, and certain

liabilities.

18. North Atlantic Edison Inc. was fully aware of the contents of the Basic Contracts on

the date of the bid, and its decision to make its bid and subsequently enter into the

PPA was premised upon its understanding that upon its investment in DEB these

agreements would be executed.

SUMMARY OF PLEADINGS

1. WHETHER THE APPELLANT JUSTIFIED IN SEEKING FOR THE

CANCELLATION OF THE LONG TERM PURCHASE

AGREEMENT WITH THERMAL POWER CORPORATION?

It is most humbly submitted before this Hon’ble Court that the Appellant is not justified in

seeking for cancellation of long term PPA between the Appellant Company and Respondent.

The humble request of not granting the relief of termination of PPA is being taken in view of

“public policy”, the termination is therefore, not in consumer interest.

2. WHETHER NORTH ATLANTIC EDISON INC IS CORRECT IN

APPROACHING THROUGH UK GOVERNMENT TO SEEK RELIEF

UNDER BILATERAL AGREEMENTS?

It is humbly submitted before this Honorable Court that the respondent requests the court to

deny state-state arbitration between Government of UK and Government of Indiana under

XVIII TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE)

2018

Article 10 of Bilateral Investment Promotion & Protection Treaty 1(hereinafter referred as

BIPA) entered on 14 March 1994 under United Nations Commission on International Trade

Law (UNCITRAL) arbitration rules.2

3. WHETHER THE STATE GOVERNMENT HAS ANY OTHER

OPTION TO DEAL WITH THE SITUATION RATHER THAN

CANCELLING THE LONG TERM AGREEMENTS?

The respondent shall humbly like to submit that cancelling the long term power purchase

agreement shall be a clear violation of the doctrine of Pacta Sunt Servanda which upholds the

sanctity of a contract and should be adhered. Moreover, there exist various other ways which

can be adopted by the State Government instead, such as making the appellant financially

viable through reducing the increasing regulatory assets, and working towards a

technological development of the distribution sector which shall lead to reduction of

technical losses, and work towards maintaining a balance between fair returns to generators

and distributors with affordable rates to consumers to fulfill the obligation of meeting public

interest at large.

1 Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of India for the Promotion and Protection of Investments, 1994.2 Bernasconi-Osterwalder, N. (2014), State-State Dispute Settlement Clause in Investment Treaties (IISD Best Practices Series). Geneva and Winnipeg: IISD. Retrieved from http://www.iisd.org/sites/default/files/publications/ best-practices-state-state-dispute-settlement-investment-treaties.pdf.

XIX TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

1 TILA INTERNATIONAL MOOT COURT COMPETITION ON ENERGY (TIMCCE) 2018

PLEADINGS

WHETHER THE APPELLANT JUSTIFIED IN SEEKING FOR THE

CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT

WITH THERMAL POWER CORPORATION?1. It is most humbly submitted before this Hon’ble Court that the Appellant is not justified

in seeking for cancellation of long term PPA between the Appellant Company and

Respondent.

2. The Respondent most humbly submits that the PPA in its present shape is:

(a) In accordance with relevant laws governing the electricity sector, i.e., the National

Electricity Policy, 2005 (“National Electricity Policy”),the National Tariff Policy

2016 (“National Tariff Policy”) and the Electricity Act2003 (“Electricity Act”);

(b) not in contravention of Section 60 of Electricity Act, as it is anti-competitive and

abuses dominance; and

(c) termination shall constitute breach of the contract

(d) is not against “public policy” in contravention to Section 23 of Indian Contract Act,

1872.

The humble request of not granting the relief of termination of PPA is being taken in view

of “public policy”, the termination is therefore, not in consumer interest.

I. THAT UNILATERAL TERMINATION SHALL CONSTITUTE BREACH OF PPA:

4. The Appellant Company with 51% share in the equity formed a joint venture with the

DEB in the year 2003. The parties mutually and voluntarily agreed to continue with the

PPA between the Appellant Company and Respondent, and thus, to terms and conditions

thereof. Thus, once there is a PPA which is valid3 and subsisting, in accordance with the

EA, 2003, there is conferred no right on either of the party to seek unilateral termination

3In accordance with provisions of Indian Contract Act, 1872


of the same. The right created under the terms of the PPA can be taken away by mutual

consent of the parties or pursuant to a regulation.4

5. Adani Power Limited v. Gujarat Electricity Regulatory Commission and Ors.5

“The PPA is not a contract dependent on the personal qualifications or volition of

the parties or such nature that the implementation cannot be enforced. There is no

termination except by non defaulting party for breach of the other party. The

Appellant entered into the PPA with the object of performing the agreement for 25

years. Therefore, the Appellant cannot claim any prolonged, unforeseen or

undeserved hardship. If the specific performance is not granted, it would cause great

hardship to the Company. Once it is held that the termination is not valid and as

such, the PPA is to be restored, then the consequential relieve would be direct to the

Appellant to supply power in compliance with the provision of the PPA.”

6. In the present case, the Appellant Company cannot seek termination of PPA on

grounds of financial inability and challenges in surviving in the business, which prima

facie cannot even be categorized as unforeseen and undeserved hardships.

7. Accordingly, the Appellant Company is bound by the terms and conditions agreed to in

the PPA.6 There is no provision in the PPA which entitles such unilateral termination and

on the purported ground of termination, namely high rate of power.7

A. THAT PPA IS NOT IN CONTRAVENTION OF SECTION 23, INDIAN CONTRACT ACT, 1872

8. It is most humbly submitted that Section 23 of the Indian Contract Act provides that

where any contractual provision defeats any provision of law or is against public policy

shall be void and thus cannot be enforceable.

4Coastal Gujarat Power Limited v. Western Regional Load Dispatch Centre Petition No. 231/MP/20155Adani Power Limited v. Gujarat Electricity Regulatory Commission and Ors ,Appeal No.184 of 20106 Indian Oil Corporation v. Nilofer Siddiqui (2015) 16 SCC 125

7 BSES Yamuna Power Limited v. Central Electricity Regulatory Commission 2014 SCC Online APTEL 46


9. In India Financial Assn., Seventh Day Adventists v. M.A Unneerikutty8, the Apex Court

looked into the ambit of public policy and observed that:

“The primary duty of a Court of a law is to enforce a promise which the parties

have made and to uphold the sanctity of contract which form the basis of society.”

10. In the present case, the PPA is in abeyance with National Electricity Policy, National

Tariff Policy, Electricity Act, 2003 and Competition Act, it is hereby contended that it

does not defeat any provision of law.

II. THAT PPA IS IN ACCORDANCE NATIONAL ELECTRICITY POLICY:

11. It is most humbly submitted before this Hon’ble Court that the PPA between the

Appellant Company and Respondent is in concurrence with the National Electricity

Policy.

12. The Central Government is empowered under Section 3 of the Electricity Act to formulate

Electricity Policy which shall aim to achieve objectives including

“(a) Ensure availability of electricity to consumers at reasonable and competitive rates;

(b) Ensure financial viability of the sector and attract investments;

(c) Promote transparency, consistency and predictability in regulatory approaches across

jurisdictions and minimise perceptions of regulatory risks;

(d) Promote competition, efficiency in operations and improvement in quality of

supply”

13. The Electricity Policy in Para 1.3 provides that “Electricity is the key drivers for rapid

economic growth and poverty alleviation”. Policy further talks about need to add to

generation capacity to cater to the increasing demand. Respondent thus, to achieve the

above objective has played a crucial role by ensuring regular supply of electricity to the

Appellant at tariff determined by the Regulatory Commission.

14. Therefore, contracts such as present have to be viewed and interpreted differently keeping

in mind that substantial public interest is involved and as such, all attempts have been

made to ensure that such contracts are implemented.9

8India Financial Assn., Seventh Day Adventists v. M.A Unneerikutty,(2006) 6 SCC 3519Reliance Infrastructure Ltd. v. MERC Appeal no. 115 of 2011


A. THAT THE OPERATIONAL RISKS WERE FACTORED15. It is humbly brought to the notice of this Hon’ble Court that the price escalations in the

power sector are a result of interaction of various market and non market forces including

lack of optimal utilization of the coal linkages with the end plant users. Internally, demand

for coal has increased however, the insufficient domestic supply of coal led to the

increased dependence on coal imports. Coal imports and their delivery face logistical

issues, thus leading to high cost owing to heat value determination. This leads to thermal

power plants paying high value.10

16. In Adani Power Ltd. v. Uttar Haryana Bijli Vitaran Nigam Ltd.11, the Court while denying

the change in Indonesian Law as a ground for termination of the agreement accepted the

contention that the tariff related risk is factored at the initial stage itself. It is implied that

while investors invest in the power sector, the higher the investment the more is risk is a

fact known to all.

B. THAT THE AT&C LOSSES HAVE DECREASED17. It is humbly contended that the energy losses occur in the process of supplying electricity

to the consumers due to both technical and commercial reasons. The technical losses,

which are inherent in a system, are due to energy dissipated in the conductors and

equipment used for transmission, transformation, sub-transmission and distribution of

power.

18. Needless to mention, the investors and parties before entering into PPAs are reasonably

presumed to have already factored such losses to be incurred during the agreement period.

It is thus, brought to the kind attention of this Hon’ble Court that the power discom has

lowered its AT&C losses to less than 9% of the total units of electricity supplied from

about 53% at the start of operations.12 Therefore, the PPA in the years to come shall prove

to be a great example that achieved the purposes of the lawmakers.

10 More Power to India World Bank document S Pargal Available at http://dx.doi.org/10.1596/978-1-4648-0233-111Adani Power Ltd. v. Uttar Haryana Bijli Vitaran Nigam Ltd ,Petition No: 155/MP/201212Moot Problem, Page 2 Para 3


III. THAT TARIFF IS IN ACCORDANCE WITH NATIONAL TARIFF POLICY:

19. Section 61 of the Electricity Act provides for guiding principles for determination of tariff

by the Appropriate Commission. The Regulatory Commissions while specifying the terms

and conditions of tariff, shall be guided inter alia by the factors “which would encourage

competition, efficiency, economical use of the resources, good performance and optimum

investments”.

20. Section 61 and 62 of the Electricity Act provide for two different concerns. Where,

Section 61 provides for the guiding principle to be followed as a mandate, Section 62

grants the Commission actual power to determine tariff. Thus, it is a legitimate legislative

presumption that once the Commission determines tariff under Section 62 it is in abeyance

of the guiding principles laid down under the Act as well as Tariff Policy.

21. Section 79(1)(a)13 confers on CERC a mandate to regulate tariff for generating companies.

The tariff for Generation Companies is determined in two parts, consisting of Fixed

Charge and Variable Charge Fixed charges and operational parameters of a generating

station is approved by the appropriate commission for a Control Period and energy charge

is based on the actual price of the fuel prevailing during the period of bill on monthly

basis for projects under Section 62 of the Act whereas the billing for the projects which

have been adopted under section 63 is also in two parts based on the capacity charge,

escalation factor etc. based on which levelized tariff is discovered.14 The tariff related

issues arising out of or in relation to the PPA are to be dealt with by the Appropriate

Commission, therefore, the principles of efficiency, economical use of the resources, good

performance and optimum investments are implicitly upheld.

22. The tariff as determined by the CERC is as per the cost of supply indicated by the

Generating Company after considering all the relevant factors. Therefore, it is most

humbly contended that the Respondent has no say in determining the tariff as this is 13 “Section 79. (Functions of Central Commission): (1) The Central Commission shall discharge the following functions, namely:-

(a) to regulate the tariff of generating companies owned or controlled by the Central Government;”

14Approach Paper on Tariff Rationalization Available at http://www.derc.gov.in/Public%20Notice/Tariff%20Rationalization/Approach%20Paper%20on%20Tariff%20Rationalisation.pdf


determined by the CERC pursuant to its power under the Electricity Act and therefore,

Respondent should not be the suffering party in this commercial transaction.

23. In All India Power Engineer Federation v. Sasan Power Ltd.15,the question before the

court was whether waiver to pay one year of tariff could be allowed in public interest. The

court highlighting the principle of consumer interest as laid down by the Appropriate

commission under Section 61, impliedly as been catered to while fixing the tariff.

A. THAT TERMINATION OF PPA LEADS TO FINANCIAL INSTABILITY

24. It is humbly submitted that there is a substantial amount investment in a generating

station. The respondent gets to service such investment over a period of time after the

declaration of commercial operation of the generating station. It is not that the entire

capital cost invested in a generating unit is to be paid to the respondent on the date of

commercial operation. The generator invests through equity and debt, based on the long

term commitments made by the procurers. Financial closure of a project is achieved and

debt is procured, based on the long term PPAs signed by the procurers with the

respondent. The tariff payable by the procurers for electricity supplied from the date of

commercial operation of the generating units is the only avenue to service the capital cost.

The producer has the certainty of demand and can plan for the necessary investments with

a long-term rationale. A provision for exit clause in the PPA whereby the procurers could

terminate the PPA, would leave the generator in lurch.16

25. National Electricity Policy provides that the coal will necessarily continue to remain the

primary fuel for meeting future electricity demand. With respect to thermal generation,

15All India Power Engineer Federation v. Sasan Power Ltd ,Civil Appeal Nos.5881-5882 of 2016

16In Re: TPDDL, Case no. 20 of 2017


entities are encouraged to enter into longer agreements so as to ensure economic and

financial viability along with ensuring security for supply.17

26. Moreover, there is a rational basis for binding the parties in the long term PPAs as the

generating companies (Respondent) invest in establishing the generating stations based on

allocation and the PPAs entered into with the procurers.18 This whole arrangement is

spread over and planned throughout the duration of the agreement. The financial stability

of the Respondent is put at stake with threats of termination.

B. THAT AVAILABILITY OF POWER AT CHEAPER RATES IS NO GROUND FOR TERMINATION

27. It is humbly contended before this Hon’ble Court that the Appellant Company is seeking

termination of this PPA in accordance with the price at which other players in the market

are procuring electricity. However, comparison is no ground for termination as PPA

between the Appellant Company and the Respondent is situation specific, which was

agreed upon depending upon the requirements and peculiarities of the parties involved.

28. In Karnataka Power Transmission Company v. R.K. Powergen Pvt. Ltd.19 the APTEL had

disallowed the termination of PPA holding that similar players in the market are getting a

higher price for the similar agreed supply, cannot be held as a ground for termination. As

such the other power producers are not comparable to the Appellant.20

29. In the present matter, the Appellant is approaching this Hon’ble Court stating that other

power producers in the market are selling at lower rates. However, this in accordance with

17 National Electricity Policy

5.2.18 Generating companies may enter into medium to long-term fuel supply agreements specially with respect to imported fuels for commercial viability and security of supply.

18Id.19Karnataka Power Transmission Company v. R.K. Powergen Pvt. Ltd.,ILR 2005 KAR 5468, 2006 (2) KarLJ 60820 Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 Statement of Reasons Available athttp://www.cercind.gov.in/2014/regulation/sor96.pdf


Konark Power case21 cannot be held as a ground for termination of PPA which has been

autonomously agreed by the Appellants.

IV. THAT THE AGREEMENT IS NOT IN CONTRAVENTION OF SECTION 60:

30. It is humbly submitted before this Hon’ble Court that the Respondent has not contravened

with Competition Act, 2002, therefore, relief under Section 60 cannot be invoked.

31. Hon’ble COMPAT in Anand Prakash Agarwal v. Dakshin Haryana Bijli Vitran Nigam

Ltd.22, inter alia it was observed that the Electricity Act, 2003 is a self-contained,

comprehensive legislation that vests the appropriate commission under that Act power to

fix tariff, which includes Fuel Supply Agreements and that there is an implied immunity

from the competition law in matters of electricity tariff approved by the appropriate

commission in terms of the Electricity Act, 2003.

A. THAT IT IS NOT ANTI-COMPETITIVE UNDER AMBIT OF COMPETITION ACT, 2002

32. Once parties enter into contractual obligations voluntarily they are bound by the terms and

conditions of the contract.23 The PPA signed pursuant to the Joint Venture, in accordance

with the tariff policy which provided for the facility to the distribution companies to

continue to procure power on negotiated basis under long-term arrangement from the

Respondent (Public Sector Undertaking) and within the timeframe allowed by the tariff

policy cannot be faulted or construed to be having adverse effect on competition in the

electricity sector.24

21Id. 22Anand Prakash Agarwal v. Dakshin Haryana Bijli Vitran Nigam Ltd ,Appeal No. 33 of 201623 A.P. TRANSCO v. Sai Renewable Power (2011) 11 SCC 3424Association of Power Producers, New Delhi v. NTPC, PETITION NO. 125/ MP/2011


B. THAT THE RESPONDENT HAS NOT CONTRAVENED WITH SECTION 4, COMPETITION ACT, 2002

33. Section 19(4) lays down various factors to determine the dominant position of any

enterprise in the relevant market. Consequently, it might be said that market share, though

a major factor, is not the sole yardstick in determination of dominance. In Ramakant Kini

v. Hiranandani Hospital, Powai25, CCI clarified that the market shares of an entity is 'only

one of the factors that decides whether an enterprise is dominant or not, but that factor

alone cannot be decisive proof of dominance. Other factors include:

market share, a the size and resources of the enterprise;

economic power of the enterprise;

dependence of consumers on the enterprise;

extent of entry and exit barriers in the market;

34. Respondent is a Central Public Sector Undertaking (CPSU) established in 1975 to

accelerate power development in Indiana and it is an energy conglomerate present in the

entire value chain of the power generation business. Respondent Company is the foremost

power generator in Indiana contributing only 24 percent of the total power generation in

Indiana and it is the largest power supplier in State of Delaware. However, upon careful

examination of the market structure, other competitors in the market, size of the market, it

can be clearly contended that Respondent is not in a dominant position and thus, does not

abuse such position in contravention of Section 4 of the Competition Act, 2002.

35. It is a settled principle of law that in cases of agreements freely and voluntarily entered

into, there can be no question of parties being not bound by the terms and conditions of

the agreement. The Hon’ble Supreme Court in Excise Commissioner v. Issac Peter26,

which was considered by the Appellate Tribunal for Electricity in the case of Indian Oil

Corporation Limited v. Gujarat State Petroleum Corporation Limited27, to hold that Gas

25Ramakant Kini v. Hiranandani Hospital, Powai ,Appeal no. 19 of 201426Excise Commissioner v. Issac Peter ,(1994) 4 SCC 10427Indian Oil Corporation Limited v. Gujarat State Petroleum Corporation Limited ,2014 ELR (APTEL) 579


Supply Agreements entered into between the parties of their own volition for commercial

purposes cannot be said to be an abuse of dominant position.

2. WHETHER NORTH ATLANTIC EDISON INC IS CORRECT IN

APPROACHING THROUGH UK GOVERNMENT TO SEEK RELIEF

UNDER BILATERAL AGREEMENTS?

36. It is humbly submitted before this Honorable Court that the respondent requests the court

to deny state-state arbitration between Government of UK and Government of Indiana

under Article 10 of Bilateral Investment Promotion & Protection Treaty 28(hereinafter

referred as BIPA) entered on 14 March 1994 under United Nations Commission on

International Trade Law (UNCITRAL) arbitration rules.29 The request is made on

following grounds-

I. ABUSE OF PROCESS

37. The Appellants claim to initiate an arbitration suit is an abuse of process because

defendants want two chances for pursuing the same claim which is contrary to the

principle of good faith recognized by domestic and international law.30 By commencing

arbitration proceedings under BIPA, Appellants are not seeking to overcome a simple

defect in jurisdiction, but are attempting to use the arbitration proceedings to get a second

chance at pursuing the same claim in spite of a serious jurisdictional defect.

38. Article on Abuse of Process in International Arbitration by Prof. Emmanuel

Gaillard3132 states, "a claimant will commit an abuse of process when it initiates more

28 Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of India for the Promotion and Protection of Investments, 1994.29 Bernasconi-Osterwalder, N. (2014), State-State Dispute Settlement Clause in Investment Treaties (IISD Best Practices Series). Geneva and Winnipeg: IISD. Retrieved from http://www.iisd.org/sites/default/files/publications/ best-practices-state-state-dispute-settlement-investment-treaties.pdf.30 Arts. 26, 31(1) of the Vienna Convention on the Law of Treaties 1969; Inceysa Vallisoletana, S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26. 31 Professor of Law, Sciences Po Law School, Paris, France; Visiting Professor, Yale Law School.32 Orascom TMT Investments S.a r.l. v. People’s Democratic Republic of Algeria [ICSID Case No.ARB/12/35, Award dated 31st May 2017


than one proceeding to resolve the same or related dispute in order to maximize its

chances of success"

39. This Court being a court of equity and good conscience, should not permit Defendants to take

advantage of their own wrong by first electing to pursue remedies under domestic laws and

then igniting further arbitration proceedings under BIPA.

40. This Court should exercise its inherent jurisdiction to prevent abuse of process and grant an

anti-arbitration injunction restraining Defendants from continuing with the arbitration

proceedings as was done by Calcutta High Court in The Board of Trustees of the Port of

Kolkata v. Louis Dreyfus Armatures SAS & Ors33

On the other hand, under Section 9 CPC, the courts in India have jurisdiction to try all suits

of a civil nature excepting suits of which cognizance is either expressly or impliedly barred.

Thus, the appropriate civil court in India has jurisdiction to entertain the suit and pass

appropriate orders in the suit by virtue of Section 9 CPC.

41. It is contended that as this Court has the jurisdiction under Indian law to prevent abuse of

process, it cannot limit its jurisdiction or refuse to exercise its jurisdiction. Article 21 of the

UNCITRAL Rules did not stipulate a negative formulation of the kompetenz kompetenz

principle that precluded a competent court (such as this Court) from exercising its

jurisdiction to prevent abuse of process. The Supreme Court in Chloro Controls India Private

Limited Vs. Severn Trent Water Purification Inc. & Others,34has rejected the concept of

negative kompetenz kompetenz.

42. This Court has the subject-matter jurisdiction to grant an anti-arbitration injunction under

Section 2035 CPC is the residuary clause which deals with the 'place of suing' as held in

Banyan Tree Holding (P) Limited v. A. Murali Krishna Reddy & Anr.,36 read with R.

Viswanathan and Others v. Rukn-ul-Mulk Syed Abdul Wajid (Since deceased) & Others.37

“What is meant by competency can be looked at from two points of view. There is the

internal competency of a court depending upon the procedural rules of the law applicable to 33Calcutta High Court in The Board of Trustees of the Port of Kolkata v. Louis Dreyfus Armatures SAS & Ors ,2014 SCC OnLine Cal 1769534Chloro Controls India Private Limited v. Severn Trent Water Purification Inc. & Others, (2013) 1 SCC 641.35 Section 20 of CPC.36Chloro Controls India Private Limited v. Severn Trent Water Purification Inc. & Others, 2009 SCC OnLine Del 3780.37R. Viswanathan and Others v. Rukn-ul-Mulk Syed Abdul Wajid (Since deceased) & Others.,(1963) 3 SCR 22


that court in the State to which it belongs. There is also its competency in the eye of

international law. The competency in the international sense means jurisdiction over the

subject-matter of the controversy and jurisdiction over the parties as recognised by rules of

international law.”

43. It is pertinent to mention that the Defendants have made a qualifying investment "in the

territory of Indiana" by virtue of their direct majority shareholding in NAEI. The cause of

action for the present suit arose within the jurisdiction of this Court and Defendants have

purposefully availed of Indiana jurisdiction, inter alia, by making an investment in Indiana,

holding economic interests in Indiana and carrying on business in Indiana and from a

reasonable and holistic perspective, working for gain within the jurisdiction of this Court. In

Modi Entertainment Network38 the Supreme Court has held, "It is a common ground that the

courts in India have power to issue anti-suit injunction to a party over whom it has personal

jurisdiction, in an appropriate case. This is because courts of equity exercise jurisdiction in

personam........"

44. It is settled law that the jurisdiction of the Civil Courts in India is all embracing except to

the extent it is excluded by an explicit provision of law or by clear intendment arising from

such law. The ouster of the jurisdiction of a Civil Court is not to be lightly inferred and can

only be established if there is an express provision of law or is clearly implied as held in

Dhulabhai v. State of M.P.39

45. India has not acceded to the position that in matters of bilateral investment treaty

arbitrations, there is an ouster of jurisdiction of National Courts as is apparent from Union

of India's refusal to accede to the five decades old 'Convention on the Settlement of

Investment Disputes between States and Nationals of Other States, 1965. However, Union

of India has not signed it and the main reason seems to be that the ICSID Convention

completely negates the role of National Courts. Consequently, there is no threshold bar

insofar as the dispute is concerned.

38Modi Entertainment Network, (2003) 4 SCC 341.39Dhulabhai Vs. State of M.P. 1968 (3) SCR 662].


46. Even if, one were to examine this issue dehors the CPC, the BIPA holds out to investors on

a standing basis the right to choose to submit the disputes for settlement by binding

arbitration. The said treaty expressly provides the consent of the Indian State to submit any

investment dispute for settlement by binding arbitration.40

47. That the Defendants are subject to the personal jurisdiction of this Court pursuant to Section

20 of the CPC as held in Lalji Raja and Sons v. Firm Hansraj Nathuram41,:

“Section 20(c) of the Code ‘confers jurisdiction on a court in India over the foreigners

if the cause of action arises within the jurisdiction of that court.....The board itself

had noticed that this rule of Private International Law is subject to special local

legislation. Clause (c) of Section 20 of ‗the Code‘ provided at the relevant time and

still provides that subject to the limitations mentioned in the earlier sections of ‗the

Code‘, a suit can be instituted in a court within the local limits of whose jurisdiction

the cause of action, wholly or in part, arises.”

48. The dispute Resolution Clause under BIPA is under Article 942 (between investor and

host state) and Article 1043 (between state and state). The agreement to arbitrate is not

itself a treaty but falls in a sui generis category. In the present BIPA Arbitration, a

contractual obligation and a contractual right is involved and therefore, there is no bar

as to the subject matter of the dispute or as to the jurisdiction of the court to hear the

present case.

49. “Fork-in-the-road”Clause: Fork in road clauses offer the investor a choice between

the host State’s domestic courts and international arbitration, but not both.44 Once the

investor has chosen, the decision is final. If the investor choses to settle dispute in the

domestic courts, the option of International arbitration is no longer available, and vice

versa. That the Respondent argues that under Article 3(3)45 parties have agreed to resort

40 British Caribbean Bank Limited, [2013] CCJ 4 (AJ).41Lalji Raja and Sons Vs. Firm Hansraj Nathuram ,(1971) 1 SCC 721.42Article 9 of BIPA.43Article 10 of BIPA.44Christoph Schreuer, ‘Travelling the BIT route: Of Waiting Periods, Umbrella clauses and Forks in Road’ (2004) 5 JWI 231-256.45Article 3 of BIPA.


to Dispute Resolution clause “only” in absence of a normal local judicial remedy being

available. Several arbitral decisions have interpreted the “fork-in-the-road” provision as

resulting in a loss of access to international arbitration only where the dispute and the

parties before the domestic courts or administrative tribunals are identical to the dispute

and the parties in the international proceeding.46

II. CLAIM FOR ARBITRATION

A. THAT THERE IS NO DISPUTE:

50. In contrast to the phrases “interpretation” and “application,” which lead to an all-

encompassing result, the reference to “dispute” could impose certain constraints on the

overall scope. Pursuant to public international law, “dispute” is defined as “disagreement

on a point of law or fact, a conflict of legal views or of interests between two persons.”47

51. Furthermore, the ICJ in the South West Africa Advisory Opinion noted that, for a

dispute to exist, “it must be shown that the claim of one party is positively opposed by the

other.”48The requirement of “positive opposition” for a dispute to exist can lead to

situations in which the respondent state seeks to “avoid” the dispute by not answering the

claimant’s claims. This is what allegedly occurred in the recent case launched by Ecuador,

in which the United States, according to Ecuador, chose to be silent in response to

Ecuador’s request to clarify the interpretation of a treaty provision in the Ecuador–United

States BIT (1993). In that case the majority of the state–state arbitral tribunal found that

there was no “dispute,” and by majority dismissed jurisdiction.49

52. Following the above judgement, it is clear that North Atlantic Edison Inc. has requested

government intervention in a debt rejig and concerted efforts to reduce their power

purchase cost, including replacement of costly long-term power purchase agreements. The

Government of Indiana has not denied for help.

46 See Compañiá de Aguas del Aconquija & Vivendi Universal (formerly Compagnie Générale des Eaux) v. Argentine Republic.47 The Mavrommatis Palestine Concessions, Judgment of 30 August 1924 (Objection to the Jurisdiction of the Court), PCIJ 1924 (Series A, No. 2), p. 11.48 South West Africa (Ethiopia v. South Africa; Liberia v. South Africa), Preliminary Objections, Judgment of 21 December 1962, ICJ Reports 1962, p. 319 (p. 328).49 Republic of Ecuador v. United States of America (PCA Case No. 2012-5)..


B. THAT APPELLANT’S ALLEGED INVESTMENT DOES NOT HAVE THE

CHARACTERISTICS OF AN INVESTMENT REQUIRED BY BIPA:

53. Article 1(b) of BIPA requires that for there to be an investment capable of protection

under BIPA, it must have the characteristics of an investment. The characteristics, namely

“the commitment of capital or other resources,” “the expectation of gain or profit,” and

“the assumption of risk.” Claimants’ “investment” has none of these characteristics.50

a) In 2001, the Salini51 tribunal set out criteria for ‘investment’52. The Salini criteria

have been converted, contrary to the erstwhile intentions of the salini tribunal

itself, into jurisdictional criteria, rather than being treated as factual indicators of

whether a commercial transaction amounts to an investment.

b) The tribunal in Romak v. Uzbekistan,53justified the objective approach in the

following terms:

“ (..) The term - investments under the BIT has an inherent meaning (irrespective

of whether the investor resorts to ICSID or UNCITRAL Arbitral proceedings)

entailing a contribution that extends over a certain period of time and that in

walls some risk (...) by their nature, asset types enumerated in the BIT’s non-

exhaustive list may exhibit these hallmarks. But if an ass it does not correspond to

the inherent definition of investment the fact that it falls within one of the

categories does not transform it into an investment.”

c) In accordance with this approach, the tribunal found that a wheat supply contract

did not amount to an “Investment”, Despite the broadly – worded definition of

“investment” in Switzerland – Uzbekistan BIT. The traditional took the view that

‘investment’ has an ‘inherent meaning’, Based on BIT’s object and purpose.

Investments are characterized by a contribution, certain duration and the

acceptance of risk.

d) The tribunal in Phoenix Action v. Check Republic also emphasized the specialized

and Ltd subject matter jurisdiction of ICSID tribunals: 50 See Christoph Schreuer, The ICSID Convention: A Commentary 140 (2001) (Resp. Auth. 32); see also Fedax N.V. v. Bolivarian Republic of Venezuela (Decision on Jurisdiction), ICSID Case No. ARB/96/3 (July 11, 1997).51Salini v. Morocco, ICSID case NO. ARB/00/4, Decision on Jurisdiction, 23 July 2001.52 Id.53Romak S.A v. Uzbekistan, PCA Case No. AA280, paras 180 and 207


“There is nothing like total discretion [sic], even if the definition of investment

developed by case laws is quite broad and encompassing. There are indeed some

basic criteria and parties are not free to decide in the BIT’s that– like a sale of

goods or diary for example – is an investment’. 54

e) It is not sufficient that Appellants establish that they have the type of interest that

could constitute an investment. Rather, Appellants must show that their particular

interest possesses the characteristics of an investment.

1. APPELLANTS’’ “INVESTMENT” DOES NOT INVOLVE THE COMMITMENT OF CAPITAL

OR OTHER RESOURCES

54. Unlike in other cases before tribunals that have considered the question of whether a

sufficient commitment has been made for the interest at issue to qualify as an investment,

Appellants have not made an “extensive” or “substantial” commitment of capital or other

resources.55 Since the Appellants’ initial expenditure they have never made any capital

contributions to NAEI nor have they made any other commitment to the financial welfare

of NAEI.

2. APPELLANTS HAD NO REASONABLE EXPECTATION OF GAIN OR PROFIT IN RESPECT

OF THEIR “INVESTMENT”

55. In his concurring opinion in CME v. Czech Republic, Professor Brownlie suggested that

the expectation of gain or profit is an indispensable element of any true investment, “as a

form of expenditure or transfer of funds for the precise purpose of obtaining a return.” 56

Professor Brownlie further required in the application of investment treaty provisions “an

element of reasonableness.”57

56. Appellants have had no reasonable expectation of gain or profit in connection with their

interest in NAEI. First, Appellants’ were fully aware that they were acquiring Delaware

Electricity Board (DEB) electricity distribution firm, which was low in operating

54Phoenix action v. Republic (n.151)55 See Liberian Eastern Timber Corp. v. Republic of Liberia (Award), ICSID Case No. ARB/83/2 (Mar. 31, 1986), 2 ICSID Rep. 343, 350 (1994) 56CME Czech Republic B.V. v. Czech Republic (Separate Opinion of Ian Brownlie Q.C.) UNCITRAL (Mar. 14, 2003), 34 (Resp. Auth. 9).57 Id.


efficiency and was running in heavy losses. Further, Appellants’ acquired the DEB

DISCOM shareholding at a time when the difficulties facing the state’s electricity sector

were well known.

3. APPELLANTS’’ “INVESTMENT” DOES NOT INVOLVE THE ASSUMPTION OF RISK

57. Tribunals considering the nature of risk associated with an investment have sought

“reasons why the risks assumed . . . were anything other than normal commercial risks.”58

The notion of investment contemplates an element of risk sharing. The risk present in the

transaction needs to different from the ordinary risks involved in commercial contracts,

such as the risk of non-performance59.

58. Here the appellants’ are not taking the risks as characterised under the Salini Criteria. The

risks of Appellants’ are normal commercial risks given the Appellants’ were aware of the

difficulties facing the state’s electricity sector and foreseeable and predictable laws of the

country.

59. Because it does not possess any of the characteristics of an investment, Article 1(b) of

BIPA, Appellants’ interest in NAEI is not an “investment” within the Treaty’s terms.

Accordingly, it falls outside of the BIPA regime and arbitral Tribunal’s jurisdiction.

V. That The Facts Alleged by Appellants in Support of Their Claim under Article 3(2) of BIPA Are Not Capable of Falling Within the Scope of That Provision

60. The standards of FET are not defined and generally offer little guidance for its application

to concrete circumstances.60 Accordingly, there is no uniform methodology for standard’s

58 See, e.g., Malaysian Historical Salvors SDN, BHD v. Malaysia (Award on Jurisdiction), ICSID Case No. ARB/05/10 (May 17, 2007).59 Joy Mining v. Egypt (n.200) para 5760See Alex Genin, Eastern Credit Ltd., Inc and AS Baltoil v. Estonia. ICSID Case No. ARB/99/2, Award 25 June 2001, para 367.


application.61 The standard does not have a consolidated and conventional core meaning

that one can easily apply.

61. FET is not used as a concept to judge the adequateness of contractual arrangements

between foreign investors and host states or conduct of States as an ordinary contracting

party.62 Also, not every infringement of national law necessarily translates into a breach of

the standard.63

62. In Plama, the tribunal held that FET was not breached because a change in law was not

aimed directly at the claimant and since the host state had not made any specific

representations to the investor about freezing the legislation.64 Similarly, the tribunal in

Glamis Gold set a relatively high threshold based on the unsettling of the reasonable

investment-backed expectations.65

63. Moreover, given the patent difference between umbrella and FET clauses, the existence of

contract alone does not create legitimate expectations protected at the international level.66

Nor can legitimate expectations override actual arrangements made between the parties.67

64. The panel in Saluka warned of the danger of taking the investor’s expectation to be the

sole the determinant since this would ‘impose upon host states’ [sic] obligations which

would be inappropriate and unrealistic.

An investor could only expect that the host state implements its policies bonafide by

conduct that is as far as it affects the investors’ investment, reasonably justifiable by

public policies and that such conduct does not manifestly violate the requirements of

consistency, transparency, even-handedness and non-discrimination. In particular any

differential treatment of a foreign investor must not be based on unreasonable

distinctions and demands, and must be justified by showing that it bears a reasonable 61Cf. e.g. Mark Kantor, ‘Fair and Equitable Treatment: Echoes of FDR’s Court Packing Plan in the International Law Approach towards Regulatory Expropriation’ (2006) 5 LPICT 231-256.62See BIVAC BV V. Paraguay, ICSID Case No ARB/07/9.63Joseph Charles Lemire v. Ukraine, ICSID Case No. ARB/06/18, Award, 28 March 2011, para 43.64Plama v. Bulgaria (n.22) para 218.65Glamis Gold v. USA (n.30) para 766.66 Franck Charles Arif v. Moldova (n.34) para. 539.67 See Walter Bau v. Thailand (n.125) para 12.31.


relationship to rational policies not motivated by preference for other investments over

the foreign owned investment.

Thus the tribunal observed that any determination that FET was violated required ‘a

weighing of the claimant’s legitimate and reasonable expectations on the one hand and

respondent’s legitimate regulatory interest on the other. Thus an evaluation of the

fairness of the conduct of the host country towards an investor cannot be made in

isolation, considering only there bilateral relations. The context of the evolution of the

host economy, the reasonableness of the normative changes challenged and there

appropriateness’ in the light of a criterion of proportionality also have to be taken into

account.68

65. In the light of above cases the government has neither violated ‘Minimum Standards of

Treatment’ nor the ‘Doctrine of Legitimate Expectations’ as the appellants’ were aware of

the socio-economic of country as well as the struggles of electricity sector. The policies of

the government are uniform for everyone and the government’s power to regulate is well

within the domestic laws of the country.

VI. THAT THE FACTS ALLEGED BY APPELLANTS IN SUPPORT OF THEIR CLAIM UNDER ARTICLE 4(1) OF BIPA ARE NOT CAPABLE OF FALLING WITHIN THE SCOPE OF THAT PROVISION

66. The Pope & Talbot tribunal set out to determine, whether the claimant was in like

circumstances as national competitors: The application of like circumstances, standard

will require evaluation the entire fact setting surrounding.69The approach to the issue of

‘like circumstances’ is very remarkable because it shows that tribunal was intent on

including room for justify differentiation, where such differentiation is based on valid

government policies.

67. The three step test was given in METHANEX tribunal and was stated that: Methanex

must demonstrate cumulatively that California intended to favour domestic investors

68 Saluka v. Czech Republic (n.12) para 304,305,306.69Pope & Talbot Inc vs Canada, UNCITRAL, Award on 10 April 2001, para 75.


against foreign investors and that Methanex and the domestic investor supposedly being

favored by California are in like circumstances.

68. In United Parcel Service Inc. v. Canada the tribunal considered that the importation of

good by post was sufficiently distinguishable from the importation of good by courier and

it thus concluded that the different characteristics of each service permitted different

customs treatment and accordingly interpreted that the services were not in like

circumstances.70

69. Herein, the Appellants and Respondents are not in ‘like circumstances’ as appellant is a

distribution company while TPC is a Generation company in electricity sector. The parties

are not operating in ‘Like circumstances’ and hence there is no violation of National

Treatment under BIPA.

VII. THAT THE FACTS ALLEGED BY APPELLANTS IN SUPPORT OF THEIR CLAIM UNDER ARTICLE 5 OF BIPA ARE NOT CAPABLE OF FALLING WITHIN THE SCOPE OF THAT PROVISION

70. The tribunal in BG Group Plc v. Argentina noted: a state may exercise its sovereign

power in issuing regulatory measures affecting private property for the benefit of the

public welfare.71

71. The tribunal in El Paso72 noted that:

245. (…) it is generally accepted that the decisive element in an indirect

expropriation is the ‘loss of control’ of a foreign investment, in the absence of any

physical taking.

249. (...) it the Tribunal’s view, a mere loss in the value of investment, even if

important is not an indirect expropriation.

233. (…) as a matter of principle, general regulations do not amount to indirect

expropriation.70United Parcel Service of America Inc vs Canada UNCITRAL, Award on 24 May 2007, para 99.71BG Group Plc v. Argentina (n.58)72El Paso Energy International Company v. Argentina (n.121)


72. The tribunal in Feldman v. Mexico described:

.At the same time governments must be free to act in the broader public interest

through protection of the environment, new or modified tax regimes, the granting or

withdrawal of government subsidies, reductions or increases in tariff levels,

imposition of zoning restrictions and the like. Reasonable governmental regulation of

this type cannot be achieved if any business that is adversely affected may seek

compensation, and it is safe to say that customary international law recognizes this.73

73. Instead, Appellants’ assertions concern the alleged detrimental economic effect on NAEI

due to certain actions by the Government. Such allegations are plainly insufficient to bring

Appellants’ within the scope of Article 5 of BIPA Rather, as in CMS v Argentina74 in

which the tribunal found that there was no indirect expropriation. Appellants retain full

ownership and control of the NAEI shareholding. Accordingly, there is no case over the

alleged breach of Article 5 of BIPA.

VIII. THAT THE CLAIMS OF APPELLANTS IN SUPPORT OF THEIR CLAIM UNDER ARTICLE 3(3) OF BIPA ARE NOT CAPABLE OF FALLING WITHIN THE SCOPE OF THAT PROVISION

74. The first time an arbitral tribunal evaluated the scope of an umbrella clause was in the

SGS Société Générale de Surveillance, S.A. v. Pakistan case,75 based on the Pakistan-

Switzerland BIT. The Tribunal rejected SGS’s contention that this clause elevated

breaches of a contract to breaches of the treaty.

75. The Tribunal in Joy Mining Machinery Limited v. The Arabic Republic of Egypt76

interpreted the “umbrella clause” in a way similar to the SGS v. Pakistan tribunal, i.e. that

the disputes at issue, which related to the release of bank guarantees, were commercial and

contractual disputes to be settled through the mechanism set forth by contract.

73Marvin Feldman v. Mexico (n101), para 103.74 CMS, 262–63.75 SGS Société Générale de Surveillance, S.A. v. Pakistan, ICSID case No ARB/01/13, decision on Jurisdiction, 6 August 2003, 18 ICSID rev- F.I.L.J. 307 (2003).76 Joy Mining Machinery Limited v. The Arabic Republic of Egypt, Award on Jurisdiction, ICSID case No. ARB/03/11, August 6, 2004.


76. In Salini Construttori S.P.A. and Italstrade S.P.A. v. The Hashemite Kingdom of

Jordan,77the Claimant requested the Tribunal to recognise that the Treaty [Article 2(4) of

the Italy-Jordan BIT], contained a commitment to observe obligations from investor-state

contracts. The Tribunal did not agree and found that the only obligation Jordan had, was

to “create and maintain a legal framework apt to guarantee the compliance of

undertakings”: “…under Article 2(4), each Contracting Party did not commit itself to

‘observe’ any ‘obligation’ it had previously assumed with regards to specific investments

of investors of the other contracting Party as did the Philippines. It did not even guarantee

the observance of commitments it had entered into with respect to the investments of the

investors of the other Contracting Parties as did Pakistan. It only committed itself to create

and maintain a legal framework apt to guarantee the compliance of all undertakings it has

assumed with regards to each specific investor”.78

77. In El Paso Energy International Company v. The Argentine Republic,79the Tribunal

rejected the arguments advanced by the US- based energy firm El Paso, which would have

permitted contractual breaches to be considered as breaches of the US-Argentina BIT. The

El Paso tribunal called for a balanced approach to investment treaty interpretation, one

which takes into account “both State sovereignty and the State’s responsibility to create

an adapted and evolutionary framework for the development of economic activities, and

the necessity to protect foreign investment and its continuing flow”.80 This rejection of the

view that interpretive doubts should be resolved in favor of foreign investor interests

would guide the interpretation of the tribunal with respect the “umbrella clause” of the

treaty.

77 Salini Construttori S.p.A. and Italstrade S.p.A v. The Hashemite Kindgom of Jordan, ICSID case No. ARB/02/13), Decision on Jurisdiction, 29 November, 2004 available at http://www.worldbank.org/icsid/cases/salini-decision.pdf78 Ibid. para. 126.79 El Paso Energy International Company v. The Argentine Republic, ICSID Case No. ARB/03/15,-Decision on Jurisdiction, 27 April 2006.80 Decision on Jurisdiction, para, 70.


78. Another tribunal in the case Pan American Energy LLC and BP Argentina Exploration

Company v. Argentine Republic ,81, CMS Gas Transmission Company v. Republic of

Argentina,82held that the contested provision in the US-Argentina BIT could not be

considered to be an “umbrella clause” which would transform contract claims into

breaches of international law. It observed that: “It would be strange indeed if the

acceptance of a BIT entailed an international liability of the State going far beyond the

obligation to respect the standards of protection of foreign investments embodied in the

Treaty and rendered it liable for any violation of any commitment in national or

international law ‘with regard to investments’”83

79. Accordingly, State has not violated umbrella clause and has only acted under its

regulatory powers.

WHETHER THE STATE GOVERNMENT HAS ANY OTHER OPTION TO DEAL WITH THE SITUATION RATHER THAN CANCELLING THE LONG TERM AGREEMENTS?1. The respondent shall humbly like to submit that cancelling the long term power purchase

agreement shall be a clear violation of the doctrine of Pacta Sunt Servanda which upholds the

sanctity of a contract and should be adhered.

2. Moreover, there exist various other ways which can be adopted by the State Government

instead, such as making DISCOMS financially viable through reducing the increasing

regulatory assets in the present case, and working towards a technological development of the

distribution sector which shall lead to reduction of technical losses, and work towards

81 Pan American Energy LLC and BP Argentina Exploration Company v. Argentine Republic, ICSID Case No. ARB/03/13 and BP America Production Co. and Others v. Argentine Republic, ICSID Case No. ARB/04/8; Decision on Preliminary Objections, 27 July 2006.82 CMS v. Republic of Argentina, ICSID case no. ARB/01/8, Award 12 May 2005.83 Decision on Preliminary Objections, para 110.


maintaining a balance between fair returns to generators and distributors with affordable rates

to consumers to fulfill the obligation of meeting public interest at large[1.4].

I. CANCELLING THE LONG TERM POWER PURCHASE AGREEMENT

VIOLATES THE DOCTRINE OF PACTA SUNT SERVANDA:

3. It is hereby humbly submitted that the maxim ‘pacta sunt servanda’ means ‘contracts are to

be kept’ and it ought to be invoked in cases where a contract had been formed after full

scrutiny as was the case in the present matter whereby the takeover of the State Electricity

Board by the appellant took place through a competitive bidding and thereby after a public

disclosure of the state of affairs, in such matters repudiating the contract cannot be liberally

permitted.84

THE STATE CANNOT CANCEL THE CONTRACT UNILATERALLY4. It is most humbly submitted that the Bombay High Court rightly held in the case of Center of

Indian Trade Unions and Another v. Union of India,85 that

“The State is a legal entity having a personality of its own, quite different and distinct from

the political party in power or the persons in office. The contractual liability of the State

under the Constitution of India is the same as that of an individual under the ordinary law of

contract. The Government of a State may sue or be sued by the name of the State. The

contractual obligations of the State are governed by the law of contract and not by the

personal whims and fancies of the people in power or the philosophy of the political party to

which they belong. The State cannot get out of its contractual obligations unilaterally except

in accordance with the laws governing the contracts.”

5. Thereby clearly stating the obligation upon the state, it being distinct from the political party

which represents the state and eliminating the option of unilaterally cancelling the contract.

84 Vidya Singh vs Life Insurance Corporation (AIR 2004 P H 359); See Also Tarun Bhargava vs State of Haryana and Anr. (2003 (2) ARBLR 645 P H); See Also Harima Sipal and Ors. Vs Hari Krishna Joshi and Anr. (2007 ACJ 1256)

85AIR 1997 Bom 79


II. RENEGOTIATING THE TARIFF IS AGAINST THE SANCTITY OF

THE PPA-6. It is most humbly submitted that renegotiation of the tariff as fixed within a Power purchase

agreement is against the sanctity of the document and is strongly disapproved by the courts

and even if the renegotiation is permitted it is under the circumstances whereby the PPA

provided for the same and not otherwise.86

A. The State Government should work towards making DISCOMS financially viable

7. It is humbly submitted that for the purpose of making Distribution Utilities financially

sustainable and stable the State Government should support them and provide compensatory

measures for the purpose of making them pay off their debts.

Offer Ujjwal Discom Assurance Yojna for the Appellant

8. It is hereby suggested that the State Government may offer this scheme, it provides for

substitution of High cost loans with Low cost bonds, it works towards Conversion of debt of

the DISCOMS into grants, and seventy five percent of the debt is transferred to the state

government budget.87

9. Under this scheme the Government negotiates over a number of steps towards bridging the

gap between the average cost of supply (ACS) and average revenue realized (ARR) by the

distribution utilities, here the appellant.

10. This shall be the best possible step towards lowering the debt and bringing a financial

stability for the appellant.

Changing the Cross Subsidy Regime

11. Increasing the transparency of the current regime is required to lower the burden on the

distribution companies, thereby making them financially viable to pay their debts.

86 Adani Power Limited vs. Uttar Haryana Bijli Vidyut Nigam Limited and ors; See Also Coastal Gujarat Power Limited vs Gujarat Urja Vikas Nigam Limited and Ors.87 Draft National Energy Policy 2017


12. Instead of the current scheme of charging higher than the generating cost from the industry

players and a highly subsidized rate from the vulnerable consumers the regime could be

changed to tax the purchases of electricity by industrial customers and using the tax

proceeds to subsidize the vulnerable customers who need subsidy.88

C.TECHNOLOGICAL DEVELOPMENT OF DISTRIBUTION INFRASTRUCTURE:

13. It is hereby submitted before the honorable court that the development of the distribution

infrastructure would play a major role in reducing the technical and commercial losses and

thereby making the distribution utility financially viable.

14. The State Government should thereby work towards developing and timely implementing

technologies which may lead to reducing the losses faced due to Power Thefts, Bill

Collection inefficiencies and lack of monitoring infrastructure. The same can be achieved

by-

a. Providing SCADA,89 Wireless SCADA90 or MATLAB,91 systems for distribution

utilities-

88 Niti Aayog, Draft National Energy Policy, Version as on 27.06.2017; This method of cross subsidization is already being followed in the state of Karnataka, it offers open access to electricity grids and practices cross subsidization through taxation.

89 Santosh B Belekar et. al., PLC and SCADA based distribution and control, Multidisciplinary Journal of Research in Engineering and Technology Volume 1, Issue 1 (April 2014) Pg. 105-110;

SCADA is The Supervisory Control And Data Acquisition is an industrial control system which organizes multiple technologies thereby allowing the processing, gathering and monitoring data together at the same time and then sending the information regarding the information collected to the control system where the same shall be analyzed as the real time data thereby leading to efficiently acknowledging the faults and quick solutions being provided. Refer Annexure I ‘SCADA in Distribution’ for a detailed map;

90 WIRELESS SCADA is the application of SCADA through wireless technologies like Radio Microwave or Satellite; Refer Annexure II ‘A practical SCADA Structure’; 91 MATLAB is a further updated version of SCADA


15. These technologies in the power sector provide for efficient controlling and monitoring and

are highly beneficial for large scale industries with a requirement of a high monitory

health.92 These softwares can be used for the purpose of gathering data from devices,

aggregating and organizing the data from local or geographically disperse assets and systems

into a consolidated and well organized solution.93

A consolidated version of the plan being proposed has been perused as being

marked Annexure I and Annexure II.

b. Providing provision for a High voltage transmission and distribution system

16. Keeping in view the techno-economic considerations a high voltage power flow is

required for long distance transmission with minimum possible losses.

17. It shall prove being an effective method for reducing technical losses, preventing theft of

power, improving the voltage of power being supplied and providing a better service to the

consumers,94 which shall in turn increase the revenue in the entire cycle of generation,

transmission and distribution.

D.MAINTAIN ABALANCE BETWEEN FAIR RETURNS TO GENERATORS AND

DISTRIBUTORS WITH AFFORDABLE RATES TO CONSUMERS:

18. It is hereby submitted that the Public interest is best served in ensuring viability and

sustainability of the entire value chain i.e. generation, transmission and distribution of

electricity,95 while at the same time facilitating power supply at reasonable rates to

consumers.

The same can be initiated by introducing reforms in the form of:

92 Poonam Shivaji et al., Wireless SCADA: Review Paper, International Journal for Scientific Research and Development, Volume 5 Issue 11 Pg. 751-75393 Tarun Agarwal, Scada Applications in Power Sector,Edgefx Technologies Pvt. Ltd.,Online: https://www.edgefx.in/scada-applications-in-power-system/94 Ankita Gupta et. al., Effectiveness of High Voltage in Distribution System: High Voltage Distribution System, IOSR Journal of Electrical and Electronics Engineering, Volume 1, Issue 5 (July-Aug. 2012), PP 34-38 (www.iosrjournals.org)95 Revised Tariff Policy, Notified on 28th January 2018


a) Peak Hour Tariff- Introducing the concept of time-of-the-day metering and differential

tariff providing an increased tariff for a particular time period shall lead to discouraging

excessive utilization of electricity during peak hours along with the DISCOMS earning

profit to lessen their debt.96

The procurement of electricity can also be separately done for base load and for peak

load from generating stations and the objective of appropriate pricing and attractive

returns over investment can also be met in this regard.97

b) Proportional increase in tariff on electricity supplied to end consumers as increase

in Power Purchasing Cost- Presently there is a mismatch between the actual fixed and

variable cost liability being incurred by DISCOMs to the proportion of cost recoverable

through fixed and energy charge.

The retail tariff should reflect the actual fixed costs, only then can competition be

achieved in the retail tariff, keeping the view of the present regulatory framework.98

ANNEXURE I - SCADA in Distribution99

96 Amulya K.N. Reddy and Gladys D. Sumithra, Karnataka’s Power Sector: Some Revelations, Economic and Political Weekly, Vol. 32, No. 12 (Mar. 22-28, 1997), pp. 585-60097 Ministry of Power, National Tariff Policy, 28th January 201698 Delhi Electricity Regulatory Commission, Approach Paper on Tariff Rationalization, February 2018, http://www.derc.gov.in/Public%20Notice/Tariff%20Rationalization/Approach%20Paper%20on%20Tariff%20Rationalisation.pdf99Id at 6


ANNEXURE II- A practical SCADA structure100

100Id


PRAYER

Wherefore in the light of the Questions presented, pleadings submitted and Authorities

Cited, the Hon’ble Supreme Court may be pleased to:

1. Order subsistence of the Long term Power Purchase Agreement for the reasons pleaded

herewith

2. Declare that North Atlantic Inc is not correct in approaching UK Government to seek relief

under the India-UK Bilateral Investment Promotion and Protection Treaty

3. Direct Concerned Government to exercise any other option that this Hon’ble Court may deem

fit in the best commercial interests of the Respondents

AND/OR

Pass any other order, direction or relief that it deems fit in the interest of Justice, Equity and

Good Conscience.

For this act of kindness, the Respondents shall duty bound forever pray.

Sd/-

(Counsel for the Respondents)

Documents

RESPONDENT MEMORANDUM file · Web viewRESPONDENT MEMORANDUM