Appealing the Applicability of the Indian Arbitration Act 1996 to Non-ICSID Investment Arbitrations

In recent decisions of the Delhi High Court, non-ICSID investment arbitrations were held to be outside the scope of the Arbitration & Conciliation Act 1996 (1996 Act) holding them to fundamentally different since their roots are in public international law and because they are non-commercial in nature. These decisions, however, have escaped a proper analysis of the hybrid foundations of an investor-State relationship, the seat theory, and issues of applicable law – which persuasively establish the applicability of the 1996 Act. In other words, the issue at the heart may be considered to be the nature of an investor’s substantive rights under an investment treaty and how they accommodate with India’s national law principles, when an investor has invoked arbitration against the host-State, which both parties accept, is subject to the law governing at the seat of arbitration. Moreover, when considering the clear distinction between the commerciality of the investor-State relationship versus the commerciality of the investment dispute, non-ICSID arbitrations would be seen immune from the commercial reservation in the 1996 Act – an argument that may be relevant among jurisdictions (like India) following the UNCITRAL Model Law or opting the commercial reservation under the New York Convention 1958.