IDRC dismisses RAKIA’s claim against India on the Bauxite Supply Agreement

The Andhra Pradesh state government has achieved a major victory against Ras-Al-Khaimah Investment Authority’s (RAKIA) $273 million damage claim by over cancellation of the Bauxite Supply Agreement (BSA) inked by AP Mineral Development Corporation in October 2008.

RAKIA, Penna Group and the Andhra Pradesh government signed a memorandum of understanding in 2007 to supply bauxite ore to the alumina refinery at Makavarapalem near Visakhapatnam. However, according to the BSA undertakings, it was to supply 224 million tonnes from Jerrela Group of Mines located in the Chintapalli Reserve Forest. The agreement was discarded when the state government was replaced in April 2016 alleging irregularities in the allotment.

A notice calling for arbitration was served citing violations of the UN-UAE International Trade Law Rules, a bilateral investment protection agreement between India and the UAE, and a bauxite supply agreement signed with APMDC in October 2008.

The International Dispute Resolution Centre (IDRC) based in London dismissed RAKIA's claim for damages after several attempts to reach a negotiated settlement failed. The IDRC said it was not authorised to arbitrate the case under the Bilateral Investment Treaty (BIT) and ordered the complainant and respondent to split arbitration expenses.

Gopal Krishna Dwivedi, the Principal Secretary and senior IAS officer said "Government of India (GoI) and Government of AP win the case in International Arbitration Tribunal, London against RAKIA. It's a great achievement for the State and APMDC."

Dwivedi congratulated the whole team of GoI and the Andhra Pradesh State Government who worked hard for it.

An aide of the Chief Minister commented that the government was relieved despite being turned down on technical grounds. He further added that government officials are determined not to allow bauxite mining against the wishes of the tribal communities.