ColumnsSuspension Of Insolvency Proceedings And Its Effect On Bilateral Investment Treaties Tariq Khan & Animesh Upadhyay9 Jan 2021 10:22 PMShare This – xRecently, the Government extended suspension of insolvency proceedings till 31st March, 2021. On 24th September, 2020, Rajya Sabha passed The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 by way of which it extended the suspension of Sections 7, 9 & 10 with a view to provide further relaxation period to companies adversely affected by COVID-19. The same…Your free access to Live Law has expiredTo read the article, get a premium account.Your Subscription Supports Independent JournalismSubscription starts from ₹ 599+GST (For 6 Months)View PlansPremium account gives you:Unlimited access to Live Law Archives, Weekly/Monthly Digest, Exclusive Notifications, Comments.Reading experience of Ad Free Version, Petition Copies, Judgement/Order Copies.Subscribe NowAlready a subscriber?LoginRecently, the Government extended suspension of insolvency proceedings till 31st March, 2021. On 24th September, 2020, Rajya Sabha passed The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 by way of which it extended the suspension of Sections 7, 9 & 10 with a view to provide further relaxation period to companies adversely affected by COVID-19. The same was originally introduced by the government during March suspending the initiation of Corporate Insolvency Resolution Process for a period of 6 months with the objective of safeguarding Micro Small and Medium Enterprises. Now, the same has been further extended for another 3 months, and although the government’s main aim is to provide a recovery period for the affected companies but this step taken by the Indian Government may have an adverse effect on foreign investors that are parties to the Bilateral Investment Treaties signed with India. The authors in this article will analyze the amendments introduced by the government and its effect on Bilateral Investment Treaties (BITs). Effect on BITs: Foreign investment is the most important component for the economic growth of any country as it is a source of foreign currency income and it provides a boost to the local economy. India has developed on the economic front due to increase in foreign investment over the past years. Reasons as to why India is considered as an attractive destination for foreign investors includes low wage rates, robust banking and the diverse market. But the most important factor that is considered by foreign investors while investing in any country is the aspect of protection of rights in that country. Special protection is needed to be provided to the foreign investors for the growth of economy. To safeguard such rights of foreign investors and to protect them from the arbitrary unilateral decisions of the host country in which they are investing, exist Bilateral Investment Treaties. Bilateral Investment Treaties are written understandings which comprises of the terms and conditions for private investment by nationals and companies of one nation in another nation. Essential clauses covered under BITs are as follows: ApplicabilityFair and Equitable Treatment and Full Protection & SecurityNational Treatment and Most-favoured Nation TreatmentExpropriationDispute Settlement Mechanisms, both between States and between an Investor and a State. India signed its first BIT with the United Kingdom in 1994 and subsequently went on to sign BITs with 86 countries. Much changed after the White Industries Australia Ltd v. The Republic of India dispute where the International Tribunal ordered India to pay 4.10 million Australian dollars to White Industries under the 1999 Indo-Australia BIT. This forced the Indian government to revisit its existing BITs. Simultaneously, India received notices under various BITs in relation to the retrospective tax amendments and cancellation of 2G licenses. Considering these incidents the Government in 2015 started drafting a new model BIT to replace the then existing model Bilateral Investment Promotion Agreement (2003). This Model was finalized in 2016. Now, as per the recent media reports India and Phillipines have begun negotiations for a new Bilateral Investment Treaty and have exchanged their model BITs. If this gets finalized then this will be India’s fifth BIT that it has signed since the release of 2016 Model BIT. Under BITs a foreign Investor is offered full protection and security and all the above mentioned clauses act as means to ensure effective assertion of right. Since the government has suspended the Insolvency proceedings under IBC it is likely that the rights of foreign investors will get substantially limited, leading to violation of promises that were made prior to investing in India. The amendments made to the Code may further lead the foreign investors to initiate action against India under the BITs for violation of FET clause, legitimate expectation and effective means rights. Breach of Fair and Equitable treatment Clause: At the time of enforcement of the Code, the government had promised to ensure great investment opportunities to foreign investors.Empathizing on the need to improve faith of foreign investors, the Supreme Court held in Macquarie bank v Shilpi Cable that it is of utmost importance that both foreign and domestic creditors are kept on equal footing. Recently, India has been entitled 63rd position in World Banks’ Ease of Doing Business Index rising from the 142nd position in 2014 globally. On the basis of such promises made at that time the Foreign Investors can resort to allege a breach of FET clause ashighlighted by therecent cases of Cairn Energy Pvt. Ltd. and Vodafone Pvt. Ltd. where India lost the arbitration matters with both the companies unanimously because of the bilateral treaties India signed with United Kingdom (In case of Cairn Energy) and Netherlands (In case of Vodafone Pvt. Ltd.). In both these cases India lost owing to the fair and equitable treatment to be provided under the BITs it signed with Netherlands and United Kingdom. The disputes in both these cases arose owing to the retrospective change in tax laws in 2012 for making them effective from 1962. India demanded tax from Vodafone and Cairn Energy retrospectively. These Companies then approached Permanent Court of Arbitration to challenge these demands as a consequence of which the government lost both the cases. In the matter of Tecmed v. Mexico in which the International Tribunal held that contracting state is duty bound to adhere to the expectations that were considered by the foreign investors during the time of making investment. FET clause as observed by the judges in the matter of MTD v. Chile states that FET clause has a magnitude importance for the foreign investors to be fully treated in a just and even-handed manner. Amendments made to the Code can also be challenged on the grounds of limiting the investors to effectively assert their rights. In such a situation “White Industries” case becomes relevant wherein India paid 4.10 million dollars to White Industries as the tribunal held that “India had not provided effective means of asserting its claims and enforcing rights”. In the present scenario the suspension for COVID-19 defaults is permanent due to which foreign investors have strong cause of action that effective means of asserting their rights has been disrupted. In its defence India might contend that there is no permanent violation but only a mere postponement of effective means of asserting rights. However, various International Tribunals in such cases have held that foreign investors will still be entitled to raise a claim on the ground that although the measure taken by the destination country may be temporary but there is a chance that deprivation to their investment is not. Concluding Remarks: In the case of Swiss Ribbons Private Limited and Anr. vs. Union of India and Ors. The constitutional validity of the IBC, 2016 was challenged and the Apex Court while upholding the constitutional validity of the Code held: “86…. These figures show that the experiment conducted in enacting the Code is proving to be largely successful. The defaulter’s paradise is lost. In its place, the economy’s rightful place has been regained.” This indicates the objective with which the Code was enacted i.e. to save the creditors from a time consuming process of recovering the debts from the wilful defaulters. Although the Indian judiciary from time and again has safeguarded the rights of investors as witnessed in the judgments rendered by the Delhi High Court and Supreme Court with respect to the Vodafone Industries; but when it comes to policy making, the Government of India lags behind despite starting several initiatives such as Make in India, Stand up India etc. An essential factor which comes in the mind of a foreign investor before making investment in any country is the municipal law of that country. The insolvency law of any country also plays a crucial role. The legislative intent behind the enforcement of IBC was to boost India’s economy by providing speedy debt recovery process to the creditors and it is for this reason that FDI inflows increased in India over the past year. However, by unilaterally suspending the insolvency proceeding, the Government has neglected the interests of foreign investors. If the foreign creditors are not allowed to recover their debts from the wilful defaulters then this will derogate India’s reputation of having a better credit market. Before taking any measures that can have an impact on foreign investors, the government should consider its obligations under the BITs as ignorance of these obligations would lead to India’s defeat in cases on an international level as was seen in the case of Vodafone Pvt. Ltd. and most recently in the case of Cairn Energy Pvt. Ltd. There is a need for establishment of coordination between the Ministry and all other ministries to discuss the obligations of India under the BITs before taking a step which may potentially affect foreign investors. By unilaterally making the amendments in The Insolvency and Bankruptcy Code, 2016 the Government of India has violated the above-mentioned clauses of BITs and has contradicted its vision of making India a good economy. India is on the path of becoming the investment hub. The goal to become investor friendly can only be achieved when decisions are taken for safeguarding the rights of investors instead of taking those decisions that are detrimental to them.Views are personal.(Tariq Khan is a practicing Lawyer and Animesh Upadhyay is a Final Year Law Student at RMLNLU)Next Story
Yesterday, Brian Wilson, co-founding singer, songwriter, and widely-renowned recording wizard of The Beach Boys, announced that he’d be postponing several tour dates, citing his need for an emergency back surgery. Dates for his recently announced and highly anticipated holiday tour, which spans from after Thanksgiving to right before Christmas in 2018, have not been affected. Instead, the announcement notes that thus far, only his upcoming tour dates in May have been postponed.As Wilson explained in a statement:As some of you might know I have been having some issues with my back that has very recently gotten worse. It runs in my family, Carl had back problems as well. My doctors have told me that I need to have back surgery immediately. They are optimistic that this will finally relieve the pain. Sadly, this means we must postpone the upcoming May shows. I’m very sorry for any inconvenience this may cause to everyone who was coming out to see us. I know that my agents are already in the process of rescheduling and we will have some of the make up dates to announce very soon. We will get you all the info ASAP. Please know that the music is in my heart and in my soul and me and the boys are looking forward to performing for you very soon. Wishing Brian Wilson the best as he takes care of his health. You can check out Wilson’s updated touring schedule here.
Notre Dame law professor John Finnis posed the question, “Who Said, ‘Blessed are the Poor’?” in a lecture Friday at the Notre Dame Center for Ethics and Culture’s 15th Annual Fall Conference entitled “Your Light Will Rise in the Darkness: Responding to the Cry of the Poor.”Finnis said the answer to the lecture’s titular question can be found by exploring the differences between the Gospels of Luke and Matthew.“The firm answer [to the question, who said, “Blessed are the Poor?”] is given by the Gospel [of] Luke,” Finnis said.Finnis said Jesus clearly that addresses not only the poor, but also his disciples, when he compares the destitute and hungry to the rich.“What [Jesus] promised the poor was not social justice,” Finnis said. “What he was — and is — holding out is the short hope of a place of Kingdom of God — not now, but as a great reward in heaven.”Finnis said “blessed are the poor” with “blessed are the poor in spirit” are found in distinct accounts of the gospels.“The Gospel according to Matthew describes similar blessings in the Beatitudes,” he said. “Notice in his account that the poverty in the third and fourth Beatitudes are spiritual. Do not care for riches. Lay up your treasures in heaven. You cannot serve two masters in God and wealth.”Luke cautions readers of his gospel about the vices wealth may spawn.“In the context of warning, [Luke] cautioned against avarice,” Finnis said. “… The poor in Luke’s straightforward sense is what the poor in spirit are to experience, that is the good news of the gospel — there is a treasure in heaven.“So, did Jesus say, blessed are the ‘poor’ or ‘poor in spirit?’ The two evangelists are reporting the same sermon. Both contain —in the same order — love your enemies, judge not others, but it seems clear one account is not derived from the other and they’re not from the same source. Two different reports on one sermon.”Finnis cited theologian John Chapman and said, “There is no reason to doubt that Jesus on inaugural sermon said both.”“While Luke’s Beatitudes may represent the fiery, original words, Matthew spiritualized them, making them applicable to the spiritual needs of others,” Finnis said. “Gospels are not eyewitness testimonies all the time, but each evangelist has arranged the accounts to address the spiritual needs of the community they are a part of.“One can forge a good argument from discontinuity for the core Beatitudes — in spirit can represent the Beatitudes in the communities. As for the other Beatitudes, they are parallel to the form and function of the work of Jesus.“Those Beatitudes may be referred to be authentic.”Tags: beatitudes, blessed are the poor, blessed are the poor in spirit, Gospel, Luke, Matthew, poor, poor in spirit
Sign up for our COVID-19 newsletter to stay up-to-date on the latest coronavirus news throughout New York Embed from Getty Images A 36-year-old Oceanside man was charged in a sweeping indictment along with nine other alleged members of the infamous La Cosa Nostra crime syndicate who stand accused of raking in millions as part of a racketeering and loan-sharking scheme.Nicholas “Pudgie” Festa of Oceanside, an alleged La Cosa Nostra Bonanno family “soldier,” and nine other alleged mafia associates were arrested Tuesday, the climax of a years-long investigation into the organized crime family, federal authorities said.Festa was charged in a loan-sharking scheme that contributed to the syndicate’s earning $26 million in illicit proceeds, authorities said. Other members of the gang were charged with murder conspiracy, illegal gambling, robbery and obstruction of justice, among other illegal acts over two decades. They were all expected to be arraigned at Brooklyn federal court on Tuesday.Acting United States Attorney for the Eastern District of New York Bridget Rohde said Tuesday’s arrests highlight the mafia’s “continued presence in the community.”“The mafia hasn’t stopped operating and the crimes these members are charged with today proves that,” added FBI Assistant Director-in-Charge William Sweeney.The indictment accuses various gang members of brutal acts of violence against victims for failing to pay back illegal loans or for retribution.Ronald Giallanzo of Queens, an acting captain in the gang, beat a man so badly that he soiled himself as Giallanzo screamed, “Where’s the f—g money?,” according to the indictment.Another member, Evan Greenberg of Queens, bragged about his ability to get people to pay up, the feds alleged.“I get my sh—t. I blow up cars. I f—g knock on people’s doors. I pull them out of their f—g house,” he said, according to the indictment.Investigators also accused Giallanzo of ordering a rival’s murder after he robbed his associates. Giallanzo allegedly traded gunshots with the victim on the streets of Howard Beach, Queens, on multiple occasions, the feds said.The government’s investigation included the use of wiretaps, cooperating witnesses, and video surveillance. Most of the alleged crimes occurred in Howard Beach. “La Costra Nostra” is roughly translated from Italian to “our thing,” and representative of the five main mafioso crime families: Bonanno, Gambino, Genovese, Lucchese and Colombo.Festa faces up to 20 years in prison for his alleged role in loan sharking. His Oceanside home is also subject to forfeiture, authorities said.This is the second mob-related bust in six days. Last week, two reputed mobsters were indicted for allegedly robbing a Franklin Square jewelry store six years ago.