Republic of India v Vedanta Resources plc

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 08 October 2020
• Neutral Citation: [2020] SGHC 208
• Court: High Court (Singapore)
• Hearing Date: 04 October 2019,07 October 2019,24 February 2020,21 February 2019
• Docket Number: Originating Summons 980 of 2018
• Plaintiff Counsel: Bull Cavinder SC, Lim Gerui, Tan Yuan Kheng, Amber Estad and Ong Chee Yeow (Drew & Napier LLC)
• Defendant Counsel: Andre Yeap SC, Kelvin Poon, Alyssa Leong, Matthew Koh, Ryce Lee and Aaron Koh (Rajah & Tann Singapore LLP)
• Subject Matter: Arbitration,Confidentiality,Documents,Evidence used in other proceedings,Interlocutory order or direction,Court's power,Arbitral tribunal,Competence,Conduct of arbitration,Preliminary issues,Declaratory relief
• Published date: 21 October 2020

Vinodh Coomaraswamy J: Introduction

Singapore’s arbitration law imposes a general obligation on the parties to an arbitration to keep the documents and proceedings in that arbitration confidential. Does this general obligation of confidentiality extend to all species of arbitration? In particular, does this general obligation extend to an investment-treaty arbitration? And if a party to an arbitration puts this question of law to the tribunal in an investment-treaty arbitration and receives an answer it does not like, can that party put the question again to a Singapore court in an application for declaratory relief? These are the principal questions raised by the application before me.

The plaintiff in this application is the Republic of India, a sovereign state. The defendant is a company incorporated in the United Kingdom.¹ The plaintiff and the defendant are now the respondent and the claimant respectively in an investment-treaty arbitration seated in Singapore. For convenience, I will refer to it this arbitration as the Vedanta Arbitration. The plaintiff is also the respondent in a related but separate investment-treaty arbitration seated in the Netherlands. The claimants in that separate arbitration are members of the Cairn Group of companies. I shall therefore refer to those claimants as Cairn, and to that arbitration as the Cairn Arbitration.

By this application, the plaintiff seeks two declarations as to Singapore’s arbitration law. The declarations are intended to pave the way for the plaintiff to cross-disclose documents between the Vedanta Arbitration and the Cairn Arbitration. The two declarations are framed as follows:² a declaration that documents disclosed or generated in the Vedanta Arbitration are not “confidential or private”; and a declaration that the plaintiff will not breach any obligation of confidentiality or privacy if it were to disclose for the purposes of the Cairn Arbitration any of the documents which were disclosed or generated in the Vedanta Arbitration.

The plaintiff seeks these two declarations both cumulatively and in the alternative. The plaintiff seeks the first declaration to establish that the general obligation of confidentiality in Singapore’s arbitration law does not extend to investment-treaty arbitration. If the plaintiff succeeds on the first declaration, the second declaration follows automatically, as it does no more than declare the effect of applying the first general declaration to the specific case of the Vedanta Arbitration. But if the first declaration fails, the second declaration does not automatically fall away. The plaintiff still seeks the second declaration in order to establish that cross-disclosure between the two arbitrations comes within an exception to the general obligation established on the first declaration.³ It is therefore necessary to consider both declarations in turn.

The defendant raises a preliminary question on the plaintiff’s application. Its submission is that the application should be dismissed in limine because it amounts to an abuse of the process of the court or a collateral attack on a decision of the Vedanta tribunal, principally because the Vedanta tribunal has already decided – upon the plaintiff’s own application – that that the general obligation of confidentiality in Singapore’s arbitration extends to investment-treaty arbitration. In the alternative, if it fails on the preliminary question, the defendant submits that the court should not exercise its discretion to grant the declaratory relief which the plaintiff now seeks.

I have answered the preliminary question in favour of the plaintiff. I do not consider that the plaintiff’s application to be either an abuse of process or an impermissible collateral attack on any decision of the Vedanta tribunal. But I have declined to exercise my discretion to grant the plaintiff the declaratory relief which it seeks, principally because I do not consider the declaratory relief to be either necessary or justified in the circumstances of this case.

I have accordingly dismissed the plaintiff’s application. The plaintiff has appealed against my decision. I now set out my reasons.

Background facts The Cairn Group restructuring

In 2006, a group of companies known as the Cairn Group restructured its Indian assets. As part of that restructuring, a British company known as Cairn UK Holdings Ltd (“CUHL”) transferred most of those assets to an Indian company known as Cairn India Limited (“CIL”). The Cairn Group carried out the restructuring by having CIL undergo an initial public offering (“IPO”) in India and then use the proceeds to acquire the Cairn Group’s Indian assets from CUHL through a series of share purchases and share swaps.

The plaintiff’s position has always been that this restructuring is a tax abusive transaction and that the resulting capital gain of about US$3.9bn in CUHL’s hands has been subject to Indian capital gains tax from 2006.

India issues assessment orders

Under Indian revenue law, the plaintiff is entitled to recover the tax which it claims to be due either from CUHL as a capital gains tax or from CIL as a withholding tax. In any event, neither company has paid the tax. The plaintiff has accordingly treated both CUHL and CIL as assessees-in-default since 2006.⁴

In 2011, the Cairn Group sold 100% of CIL to the defendant and its group of companies.

In 2015, the Indian revenue authorities issued a tax assessment order against CUHL and another against CIL (the “Assessment Orders”).⁵

Commencement of the arbitrations

The Vedanta Arbitration and the Cairn Arbitration are the direct result of the Assessment Orders. The two arbitrations have a number of common features. Both arbitrations arise from the same underlying transaction. Both are brought under the bilateral investment treaty (“BIT”) known as the Agreement between the Government of the Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the Promotion and Protection of Investments signed on 14 March 1994 (“India-UK BIT”).⁶ Both are administered by the Permanent Court of Arbitration (“PCA”). Both are conducted in accordance with the United Nations Commission on International Trade Law Arbitration Rules 1976 (“UNCITRAL Rules”).⁷

But, because CIL changed ownership in 2011, after the plaintiff alleges that the tax liability arose, the two arbitrations were commenced separately and have proceeded along different paths before different tribunals in different seats.

Cairn commenced arbitration against the plaintiff first, in September 2015. The Cairn Arbitration is seated in the Netherlands. Cairn’s case is that the Assessment Order against CUHL is contrary to CUHL’s legitimate expectations in 2006 that the Cairn Group’s restructuring that year did not attract any liability for capital gains tax under Indian revenue law.⁸

The defendant commenced arbitration against the plaintiff in November 2015. The Vedanta Arbitration is seated in Singapore. The defendant’s case in the arbitration is that it had a legitimate expectation in 2011 that the Cairn Group’s restructuring in 2006 had not attracted any tax liability on a capital gain in the hands of CUHL.

The Arbitral Tribunals issue procedural orders

Because both arbitrations arise from the same underlying transaction and under the same BIT, the plaintiff is concerned about the risk of inconsistent findings by the two tribunals. Inconsistent findings are not only a possibility on the merits of the parties’ disputes⁹ but also on jurisdictional issues common to both arbitrations.¹⁰ The plaintiff’s position is that, in order to mitigate this risk, a regime is needed in both arbitrations to permit cross-disclosure of documents between the two arbitrations.

This application arises out of the plaintiff’s efforts to put such a regime in place in both arbitrations. The background to this application therefore requires an examination of four of the many procedural orders in both arbitrations: one procedural order issued in the Cairn Arbitration and three issued in the Vedanta Arbitration. I now summarise these four procedural orders.

Cairn Arbitration Procedural Order No. 10

In September 2017, on the plaintiff’s application, the Cairn tribunal issued Procedural Order No. 10 (“CPO 10”). CPO 10 set out the Cairn tribunal’s cross-disclosure regime. CPO 10 allows cross-disclosure with the consent of the opposing party or with the permission of the tribunal.

One of the premises of CPO 10 is that the parties to an investment-treaty arbitration are subject to no general obligation of confidentiality under the law of the Netherlands as the Cairn Arbitration’s lex arbitri.¹¹ As a result, CPO 10 is premised on a regime of open document disclosure. It therefore includes express language that the Cairn tribunal will uphold objections to disclosure only rarely. In particular, in describing a party’s right to object to disclosure, CPO 10 provides as follows at para 24(b):¹²

Within seven business days … the other Party may raise objections to such a disclosure, redact any sensitive information, or specify any special confidentiality requirements relative to the [Vedanta Arbitration] (for instance, the requirement that Vedanta agree to keep the documents confidential), it being understood that any such objections or redactions would need to be well-justified and would constitute a rare exception to the principle of open document disclosures. The Tribunal shall be copied in this correspondence.

[emphasis added]

Vedanta Arbitration Procedural Order No. 3

In May 2018, also on the plaintiff’s application, the Vedanta tribunal issued Procedural Order No. 3 (“VPO 3”). VPO 3 is the Vedanta tribunal’s analogue of CPO 10. VPO 3, like CPO 10, allows cross-disclosure with the consent of the opposing party or with the permission of the tribunal. VPO 3, however, proceeds on...