Republic of India v. CCDM Holdings

Coming soon.

Original decision: Quebec Court of Appeal

COURT OF APPEAL

CANADA

PROVINCE OF QUEBEC

REGISTRY OF MONTREAL

Nos.: 500-09-030393-235, 500-09-029899-226 and 500-09-700124-225 (500-11-060766-223, formerly 500-17-119144-213)

DATE: 4 December 2024

PANEL:

THE HONOURABLE

GENEVIÈVE  MARCOTTE, J.A.

BENOÎT  MOORE, J.A.

SOPHIE LAVALLÉE, J.A.

No. 500-09-030393-235

The Republic of India

APPELLANT – respondent

v.

CCDM Holdings, LLC

Devas Employees Fund Us, LLC

TELCOM Devas, LLC

RESPONDENTS – applicants in the continued proceeding

and

AIRPORT AUTHORITY OF INDIA

AIR INDIA LIMITED

IMPLEADED PARTIES – impleaded parties

and

INTERNATIONAL AIR TRANSPORT ASSOCIATION

IMPLEADED PARTY – garnishee

No. 500-09-029899-226

CCDM Holdings, LLC

Devas Employees Fund   Us, LLC

TELCOM Devas, LLC

APPELLANTS – applicants in the continued proceeding

v.

 AIRPORT AUTHORITY OF  INDIA

RESPONDENT – impleaded party

and

INTERNATIONAL AIR TRANSPORT ASSOCIATION

IMPLEADED PARTY – garnishee

and

THE REPUBLIC OF INDIA

IMPLEADED PARTY – respondent

and

AIR INDIA LIMITED

IMPLEADED PARTY – impleaded party

No. 500-09-700124-225

CCDM Holdings, LLC

Devas Employees Fund Us, LLC

TELCOM Devas, LLC

APPELLANTS – applicants in the continued proceeding

v.

AIRPORT AUTHORITY OF   INDIA

RESPONDENT – impleaded party

and

INTERNATIONAL AIR TRANSPORT ASSOCIATION

IMPLEADED PARTY – garnishee

and

THE REPUBLIC OF INDIA

IMPLEADED PARTY – respondent

and

AIR INDIA LIMITED

IMPLEADED PARTY – impleaded party

 
DECISION

[1] These three appeals, which have been heard together, are from three judgments rendered in 2022 by the Honourable Mr. Justice Michel A. Pinsonnault of the Superior Court of Quebec, District of Montreal, in an application for recognition and enforcement of two foreign arbitral awards. Pursuant to the awards, the Republic of India (“India”) was ordered to pay USD 111 million to the investors and shareholders of Devas Multimedia Services (“Devas”), being CC/DEVAS (Mauritius) Ltd, Devas Employees Mauritius Private Limited and Telcom Devas Mauritius Limited, all of which have their domicile in the Republic of Mauritius (collectively, the “Devas Investors and Shareholders”). The proceeding the Devas Investors and Shareholders brought was continued by CCDM Holdings LLC, Devas Employees Fund US LLC and Telcom Devas LLC (collectively, “CCDM/Devas”).

A.    Background facts in common

[2] The two arbitral awards were rendered by the Permanent Court of Arbitration seated in The Hague (“PCA”) and arose out of a commercial dispute between Devas and Antrix Corporation Limited (“Antrix”), an Indian state-owned company.

[3] In the first award, rendered on 25 July 2016 (the “Merits Award”),[1] India was found liable for having expropriated Devas’ investments, in breach of the international commitments set out in the bilateral investment treaty entered into between India and the Republic of Mauritius for the protection and promotion of investments in their respective territories (the “Treaty”).[2]

[4] The second award, rendered on 13 October 2020, quantified the damages India was ordered to pay at USD 111 million (the “Quantum Award”).[3]

[5] India has not paid the amount of the award to date and has gone to great lengths to have the awards set aside or varied, which has led to the Devas Investors and Shareholders seeking recognition and enforcement in several countries, including the Netherlands, France, Belgium, Luxembourg and the United Kingdom.

[6] Under these circumstances, in November 2021, the Devas Investors and Shareholders applied to the Superior Court of Quebec for recognition and enforcement of the two arbitral awards and sought a first notice of execution for seizure before judgment by garnishment from the International Air Transport Association (“IATA”), the international air transport organisation responsible for collecting airport charges and remitting them to the authorities or airlines. The Devas Investors and Shareholders thus sought to seize all funds owed to or assets owned by the Airport Authority of India (“AAI”), the state body responsible for managing India's airports and airspace. They took the same steps the following month to seize from IATA funds owed to or assets owned by Air India, India's state-owned airline.

[7] At this point, it is worth describing the origins of the dispute between Devas and Antrix, and that between the Devas Investors and Shareholders and India. In the wake of the Treaty, on 28 January 2005, Devas signed an agreement with Antrix, the commercial arm of India’s Department of Space (“DOS”) and the Indian Space Research Organisation (“ISRO”). Under this agreement, Antrix was to lease a portion of the 2500-2690 Mhz S-band broadcast spectrum to Devas and supply to it two satellites that would be built, launched and operated by ISRO, while Devas was to install antennae and transponders to provide wireless services throughout India, and in particular wireless Internet and audiovisual services (the “Devas Agreement”).[4]

[8] The Devas Agreement, which is covered by the Treaty, required the Devas Investors and Shareholders to make an initial payment of USD 40 million.[5] Antrix was required to obtain a series of authorisations from the Indian government so that the satellites could be built, launched and operated. On 1 December 2005, India authorised the manufacture and launch of the satellites needed to implement the Devas Agreement. On 2 February 2006, Antrix confirmed to Devas in writing that it had obtained all the necessary authorisations, such that the Devas Agreement was then in effect.

[9] However, in September 2007, India's military and paramilitary agencies raised the issue of whether the wave spectrum would be accessible for military purposes if the State were to make it available for commercial use. Then, from 2009 onwards, India considered terminating the Devas Agreement, leading to the delivery of the first satellite, initially scheduled for June 2009, being postponed to late 2009 and then to September 2010. Meanwhile, the Devas Investors and Shareholders continued to pay the amounts due under the Devas Agreement, and injected more than USD 25 million into Devas through share purchases.

[10] On 23 April 2010, India's Ministry of Defence sent a letter to ISRO informing it that its need for wave spectrum would almost double between 2017 and 2022. From May 2010, as rumours spread regarding the Devas Agreement and the media called on the Indian government to terminate it, a number of meetings were held between the Devas Investors and Shareholders and various government bodies, at which there was no question as to the viability of the Devas Agreement or the allocation of part of the airwaves spectrum to Devas.

[11] On 12 July 2010, the Solicitor General of India issued an internal opinion confirming that the grounds for terminating the Devas Agreement, including the application of the force majeure clause (11(b)), were valid. A few days later, the Indian Space Commission adopted a resolution supporting the termination of the Devas Agreement.

[12] On 9 January 2011, the Secretary of the DOS, acting on behalf of the Space Commission, submitted a report to it that asserted that the airwave spectrum granted to Devas would impede the DOS's and ISRO's requirements from being met and that it would have been necessary to consult with the Indian Satellite Coordination Committee before concluding the Devas Agreement.

[13] On 8 February 2011, the Indian Space Commission held a press conference to announce its decision to terminate the Devas Agreement. The following day, India set up a committee to carry out a technical, commercial, procedural and financial review of the Devas Agreement, based on various reports that had already been published. Then, on 16 February 2011, a note was sent to India's Security Committee responsible for prioritising the country's strategic needs, including societal needs, which set out the requests from various government bodies for a share of the airwave spectrum. On 17 February 2011, the Committee issued a press release announcing its decision to terminate the Devas Agreement. Then, on 23 February 2011, the DOS instructed Antrix to take immediate steps to terminate the Agreement.

[14] This led to Antrix giving notice to Devas on 25 February 2011 that it had decided to terminate the Devas Agreement on the grounds of force majeure. This in turn led to the arbitration process provided for in the Devas Agreement between Devas and Antrix (the “Antrix Arbitration”), as well as to the arbitration process between the Devas Investors and Shareholders and India, as the party responsible for the decision to terminate the agreement (the “India Arbitration”).

[15] On 14 September 2015, an arbitral tribunal constituted in an arbitration administered by the International Court of Arbitration of the International Chamber of Commerce dismissed the force majeure defence raised in the Antrix Arbitration and ordered Antrix to pay Devas damages of USD 562.5 million, plus interest at a rate of 18% per year (the “ICC Award”).[6]

[16] On 25 July 2016, in the India Arbitration, a tribunal constituted in an arbitration administered by the PCA (the “PCA Arbitral Tribunal”) found India liable for unlawfully expropriating Devas and for breaching its fair and equitable treatment obligation.[7]

[17] Since then, both sides have made many applications to the courts of various jurisdictions to challenge the award and/or have it recognised and enforced. India has also brought criminal charges against certain Indian officials and Devas representatives, alleging that they have breached peremptory provisions of the Devas Agreement.

[18] On 27 October 2016, India applied to the District Court of The Hague to have the Merits Award set aside on the grounds that the arbitral tribunal lacked jurisdiction over it and that its right to be heard had been breached.

[19] On 21 December 2016, the PCA Arbitral Tribunal rejected, on an interim basis, India's request, based on fraud allegations, for a stay of the quantum phase in the India Arbitration pending a final decision by the Indian courts, on the grounds that the fraud allegations were against Devas and not its investors and that there was no evidence to support fraudulent conduct by its investors.[8]

[20] On 13 December 2017, in a different arbitration involving India and Deutsche Telekom AG (the “Telekom Arbitration”) relating to a completely different transaction, India was found to be in breach of its fair and equitable treatment obligation under the bilateral investment treaty with Germany.[9]

[21] On 14 November 2018, the District Court of The Hague dismissed the application to set aside the Merits Award. On 12 February 2019, India appealed to the Court of Appeal of The Hague, which dismissed the appeal in a judgment rendered on 16 February 2021.[10]

[22] Meanwhile, on 25 May 2020, a quantum award was rendered in the Telekom arbitration in Germany. Under that award, India was ordered to pay USD 93.3 million plus costs of the arbitration.[11]

[23] On 13 October 2020, India was also ordered to pay the Devas Investors and Shareholders damages of USD 111 million as compensation for the unlawful and unjustified expropriation of 40% of their investments in India.[12]

[24] Meanwhile, Devas and some members of its board of directors were accused of new financial offences, leading to their being sentenced to pay substantial fines.

[25] On 4 November 2020, the Supreme Court of India (“SCI”) reviewed the territorial jurisdiction of the Indian courts before which the parties had brought appeals against the ICC Award. It stayed the effects of the ICC Award pending its decision on the grounds raised. [13] On the same day, India amended by ordinance the Arbitration and Conciliation Act, 1996, to require the tribunal to stay an arbitration award where it forms a prima facie view that the contract that is the subject of the decision or the decision-making process is tainted by fraud or corruption.[14]

[26] On 18 January 2021, the Indian Ministry of Corporate Affairs granted Antrix leave to initiate winding-up and liquidation proceedings against Devas. On 18 January 2021, Antrix filed a petition before the National Company Law Tribunal (“NCLT”), which on the following day stripped the Devas board of directors of its authority and appointed a provisional liquidator from the Indian Ministry of Corporate Affairs.[15] In the days that followed, the liquidator revoked the mandates of all the lawyers acting for Devas in the various proceedings for recognition and enforcement of the arbitral awards around the world. On 24 February 2021, in the face of the provisional liquidator's actions and wishing to maintain their legal representation in the U.S. proceedings, the Devas Investors and Shareholders sought an order from the U.S. courts enjoining the provisional liquidator from entering into a settlement with Antrix with respect to the ICC Award.[16]

[27] On 5 February 2021, India filed an application with the District Court of The Hague to set aside the Quantum Award, which was dismissed on 16 February 2021, as was the appeal against the Merits Award.[17]

[28] On 25 May 2021, the NCLT issued a final winding-up order against Devas,[18] which was subsequently affirmed by the NCLT's appellate division on 7 June 2021.[19]

[29] On 17 January 2022, the SCI dismissed Devas’ appeal against the NCLT's liquidation and final winding-up orders and confirmed that the liquidation of Devas was warranted as it had been formed fraudulently and for unlawful purposes (the “SCI Judgment”).[20]

[30] On 14 April 2022, India applied to the Court of Appeal in The Hague to set aside the arbitral awards rendered against India on the basis of the SCI Judgment. This application was dismissed on 6 February 2023.

[31] Meanwhile, on November 15, 2021, the Devas Investors and Shareholders applied to the Superior Court of Quebec for recognition and enforcement of foreign arbitral awards (Merits Award and Quantum Award) and for a first notice of execution for seizure before judgment by garnishment of the funds belonging to AAI held by IATA. This last step prompted IATA to file a declaration stating that it held USD 6,819,613 belonging to AAI.

[32] On 24 November 2021, the Devas Investors and Shareholders were authorised ex parteto effect a seizure before judgment by garnishment of the funds held by IATA on behalf of AAI (the “Granosik Judgment”).[21] This seizure was followed by a second application for seizure before judgment by garnishment, which was also granted on 21 December 2021 on an ex parte basis, relating to funds held by IATA that belonged to Air India (the “Buchholz Judgment”),[22] which led to IATA making a new affirmative declaration stating that, as of 21 December 2021, it held USD 17,306,658 on behalf of Air India and USD 12,767,745 on behalf of AAI.

[33] AAI, Air India and IATA then sought to have the seizures quashed, and CCDM/Devas served notices of continuance of the Devas Investors’ and Shareholders’ proceedings. These applications were heard on 4 and 5 January 2022, and led to the judgment rendered by Justice Pinsonnault on 8 January 2022 (the “Seizure-Quashing Judgment”),[23] which dismissed Air India's application to quash the seizure before judgment by garnishment in respect of Air India’s assets held by IATA, but reduced the scope of the seizure by 50%, and quashed the seizure by garnishment ordered on 24 November 2021 in respect of AAI's assets.  The second appeal was brought against the Seizure-Quashing Judgment. CCDM/Devas was granted leave to appeal and an order was issued staying provisional execution pending the appeal.[24] Note that, in a separate case, Air India and CCDM/Devas were granted leave to appeal the same judgment regarding the fate of the second seizure.[25]This appeal has already been decided and the seizure of Air India's assets has been quashed (the “Air India Decision”).[26]

[34] On 5 May 2022, in response to the seizures before judgment by garnishment ordered in this case, a bill was tabled in Quebec's National Assembly. The following month, on 1 June 2022, the Act respecting the International Air Transport Association (the “AIATA”) was passed. The Act states that “[t]his Act has effect from 5 May 2022” and that sums of money held by IATA on behalf of foreign states or bodies of foreign states may not be the subject of seizures[27].

[35] On 27 June 2022, AAI filed a new application to quash the seizure before judgment by garnishment dated 24 November 2021, in which it argued that the effect of the AIATAwas to retroactively render any amount of money held by IATA in relation to a “participant in its financial services”, including the amounts held and seized in November 2021, incapable of being seized.

[36] On September 6, 2022, Justice Pinsonnault rendered a judgment on the application of the AIATA (the “AIATA Application Judgment”).[28] He held that the validity of the seizures before judgment by garnishment already ordered in November and December 2021 was a matter for the Court of Appeal to decide, since two appeals had already been filed with this Court in relation to those seizures, in respect of which he considered himself to be functus officio. However, he acknowledged that he would have to rule on the declaratory relief sought in the alternative regarding what to do about the funds collected after the AIATAcame into force on 5 May 2022, since this issue has not yet been decided.[29] He held that the funds paid to IATA after 5 May 2022 could not be seized, despite the orders of 24 November 2021, and that, since the seizure was to be carried out over time, the clear language of the AIATA barred any execution after 5 May 2022.[30] That judgement is the subject of the third and final appeal.

[37] After the application for recognition and enforcement of the two arbitral awards was brought in November 2021, a letter and certificate from the Deputy Director of Global Affairs Canada was filed in January 2022 certifying that India is a foreign state within the meaning of section 14 of the State Immunity Act(the “SIA”).[31]

[38] Then, on 16 March 2022, India filed a de bene esse application arguing that the application for recognition and enforcement of the arbitral awards was inadmissible and should be dismissed, on the grounds that India enjoys a strong presumption of immunity under sections 3 and 6 of the SIA. In a judgment rendered on 23 December 2022, Justice Pinsonnault dismissed this application and declared that India was not entitled to immunity under the SIA on the basis that the commercial activity and waiver exceptions applied (the “Immunity Judgment”).[32]. This judgment is the subject of the first appeal, for which leave to appeal was granted by a judge of this Court, subject to $20,000 in security for costs.[33]

[39] We will address the three appeals in the order set out in the documents and submissions, rather than in the chronological order of the judgments that are the subject of the appeals. We will begin by reviewing the grounds of appeal raised in respect of the Immunity Judgment, before addressing the appeal against the Seizure-Quashing Judgment, and then turning to the appeal against the AIATAApplication Judgment.

B.   The Republic of India v. CCDM Holdings LLC. et al. (500-09-030393-235)

[40] In this first appeal, India appeals the judgement[34] dismissing its application challenging admissibility based on state immunity grounds, which sought to bar the application for recognition and enforcement of the two arbitral awards.[35]

1. Immunity Judgment

[41] On 23 December 2022, Justice Pinsonnault dismissed India’s application challenging admissibility. As a foreign state within the meaning of section 2 of the SIA, India is entitled to the presumption of immunity set out in subsection 3(1) of the SIA. Justice Pinsonnault held that the onus was on CCDM/Devas to rebut this presumption, and that they had done so by correctly relying on the commercial activity and waiver exceptions. He noted that the Treaty contains the following obligations:

• 4(1): fair and equitable treatment obligation;

• 6(1): obligation not to expropriate or nationalise investments;

• 6(3): positive obligation to compensate investors to ensure fair and equitable compensation;

• 8(1) and (2): obligation to use the alternative dispute resolution system put in place.[36].

[42] He then held that the commercial activity exception applied in this case and that India was not entitled to any immunity since its activities were commercial in nature when analysed in context:[37]

• Antrix is India's commercial arm;

• the arbitral awards are directly linked to a decision by India not to honour its commitments under the Treaty, which is designed to encourage foreign investment and is clearly a commercial treaty;

• the purpose of the Devas Agreement was for Antrix to lease part of the airwave spectrum granted to India by the United Nations;

• the Devas Agreement is undoubtedly commercial in nature;

• by investing in Devas, the Devas Investors and Shareholders financed Indian commercial activities; and

• India's decisions resulted in the termination of the Devas Agreement, which is a commercial contract.[38]

[43] The judge also relied on certain findings of the PCA Arbitral Tribunal in concluding that the relationship between Devas and India was strictly commercial in nature, namely that:

• India decided to unilaterally terminate the Devas Agreement;

• the tribunal hearing the Antrix Arbitration rejected Antrix's argument that it had terminated the Devas Agreement because of force majeure;

• India's decision that led to the termination by Antrix meant that no commercial agreement could be concluded;

• while 60% of the airwave spectrum was expropriated for public interest purposes, 40% was expropriated without such a purpose; and

• fair and equitable compensation for the expropriation of the 40% was estimated at $111 million.[39]

[44] Pinsonnault J. thus rejected the argument that the termination of the Devas Agreement was nothing more than India exercising its sovereign powers. He found that, by ratifying the Treaty, India agreed to carry out commercial activities. It was through the Devas Agreement that the Devas Investors and Shareholders were able to make their investments within the meaning of the Treaty. Therefore, India's actions took place in a commercial context. Accordingly, the commercial activity exception applied, and India could not benefit from immunity as a sovereign state within the meaning of the SIA.[40]

[45] Although he found that the commercial activity exception applied, which in his view was sufficient to deprive India of state immunity, the judge went on to consider the waiver exception.

[46] He found that this exception applied, because, in agreeing to submit to the arbitral process and to an award by the PCA Arbitral Tribunal, India had also agreed that the award could be enforced. He based this conclusion on his interpretation of the wording of paragraph 4(2)(a) of the SIA, which he compared to other provisions of the SIA, among other things. In his view, neither a separate nor a written waiver was required, since Parliament had expressly provided for other forms of waiver.[41]

[47] According to the judge, India's agreement to submit to arbitration amounted to a clear and unequivocal waiver of its right to claim immunity. He noted that ratification of bilateral treaties providing for arbitration and agreements to submit to arbitration have been recognised in Canadian jurisprudence as ways of waiving immunity.[42]

[48] In his view, this conclusion is consistent with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”)[43], which has been incorporated into Canadian law at the federal level[44] and into Quebec law[45] and has been ratified by India,[46]as well as being consistent with case law from other common law jurisdictions, such as the United States and Australia, and even from Indian courts. Thus, as a signatory to the New York Convention, India could not regard itself as being immune from the arbitral process to which it knowingly agreed to be subject.[47]

[49] The judge then turned to India's alternative argument, based on the SCI Judgment. He first partially dismissed CCDM/Devas' objection to the SCI Judgment being filed and used to establish that the Devas Agreement was tainted by fraud, thereby defeating the waiver of immunity exception invoked by CCDM/Devas. He granted leave to file the judgment, but only to prove that the SCI had confirmed that the winding-up of Devas in India was lawful under the circumstances more fully set out in the judgment. The judge also noted that the SCI judgment could have some relevance in the context of a future merits hearing.[48]

[50] The judge also rejected India's arguments, based on the SCI judgment, that the Devas Agreement was tainted by fraud and that consent to arbitration was thus vitiated, which would have rendered the waiver of immunity exception inapplicable. In his view, the SCI Judgment does not have res judicata effect in Quebec. According to the judge, both the parties and the cause of action are different from those in the arbitral awards, and the SCI judgment is irrelevant in this case, since the issues it addresses have nothing to do with the immunity issue. In his view, India was attempting to undermine the arbitral awards after the fact, even though, by refusing to stay the arbitration pending the SCI Judgment, the PCA Arbitral Tribunal had already decided and dismissed the admissibility argument raised, as well as the effect of the allegations of fraud raised in the SCI Judgment.[49] He added that India had only ever raised this fraud argument before the SCI, and had never raised it in the arbitration.

[51] Finally, regarding the argument that a rebuttable presumption exists that the SCI judgment is valid, the judge found that the presumption is inapplicable here, since India invoked the decision as evidence without having sought recognition of the foreign judgment in Quebec.

[52] Finally, as to the semi-authentic nature of the certified SCI Judgment, the judge stated that the facts set out in a semi-authentic act are not binding on Quebec courts and that India therefore could not rely on the SCI Judgment to avoid the application of the waiver exception or of the Treaty itself.[50]

2. Grounds of appeal

[53] On appeal, India argues that the judge made a palpable and overriding error in concluding that the commercial activity exception applies in this case. India submits that this error stems from the fact that he considered the context of the decision to terminate the Devas Agreement from an overly broad perspective. It argues that the core of the activity was the decision to terminate the Agreement, and that it is on the basis of this decision alone, taken in isolation, that the commercial activity exception should be considered. Therefore, since the decision to terminate the Devas Agreement was motivated by national interest considerations, as the PCA Arbitral Tribunal recognised, India submits that the commercial activity exception should not be applied.

[54] India also contends that the judge erred in concluding that its agreement to submit to arbitration, in accordance with its international commitments under the New York Convention, amounted to an express waiver of its immunity under the SIA. According to India, Parliament required waivers to be express under paragraph 4(2)(a) of the SIA, whereas section 12 provides for implicit waivers. It follows that merely submitting to the jurisdiction of a tribunal cannot be characterised as an express waiver.

[55] Lastly, India argues in the alternative that, even if the waiver of immunity exception were to be upheld, the waiver should be considered invalid since the SCI found that the Devas Agreement was entered into fraudulently, and this agreement is the basis for the two arbitral awards that CCDM/Devas are seeking to have recognised and enforced before the Quebec courts. 

[56] CCDM/Devas submit that the judge was correct in finding that the commercial activity exception applied (section 5 of the SIA). In their submission, the judge followed the analytical framework put forward by La Forest J. in Reference re Canada Labour Code,[51] by following the contextual approach provided for in that decision, which requires considering the activity as a whole and its context. The judge was correct in analysing the entire decision-making process leading to the conclusion of the Devas Agreement and even the subsequent actions.

[57] CCDM/Devas also submit that the judge was correct in finding that the waiver of immunity exception (paragraph 4(2)(a) of the SIA) applies. Indeed, the two elements combined, i.e. India having ratified the New York Convention and having accepted that the dispute be arbitrated pursuant to the Treaty in accordance with the rules of the United Nations Commission on International Trade Law (“UNCITRAL”), amounted to an express waiver.

[58] As already stated, India submits that the judge erred in concluding that these two exceptions apply. It first addresses the commercial activity exception, and then the express waiver exception, following the order that the application judge followed. However, the Court is of the view that it is more appropriate to consider first whether it appears from the record that India has waived its immunity expressly under paragraph 4(2)(a) of the SIA. If it has, then the exception set out in paragraph 4(2)(a) will apply, and there will be no need to consider the commercial activity exception set out in section 5 of the SIA. In any event, it is worth noting that the commercial activity exception in section 5 of the SIA can be considered conceptually as a form of implied waiver of immunity, as Fox and Webb suggest:[52]

Even express consent as waiver of immunity by the foreign State when reduced to legislative form by appearance in court or the taking of a step in the proceedings involves some extension beyond a statement in words that the national court may proceed. A bolder use of implied waiver was developed so as to result in loss of immunity from the State’s voluntary undertaking of a business of the same kind as carried on by a private person. Here, three legal techniques are combined: consent of the State to the local jurisdiction construed by its engaging in a transaction on that basis; conduct of a business whose commerciality distinguishes it from the more usual activity of a State for the public benefit; and engaging in that business with and in the manner of a private person, the private law nature of the transaction engaged in supplying additional evidence that the State voluntarily intended to subject itself to the national court. Thus introduced by way of implied waiver, we find the two tests most frequently employed to determine the non-immunity of a transaction: private law character and commerciality. [References omitted]

[59] Moreover, as our colleague Justice Bachand stated when he was a professor, since the commercial activity exception may make the outcome of international arbitrations dependent on considerations that are purely political [53], the waiver exception is the most promising means of rebutting the presumption of immunity.Indeed, as he stated, the very nature of international arbitration requires arbitral tribunals and national courts to act in tandem to give full effect to arbitral awards:

Consent to final and binding arbitration constitutes, first and foremost, an explicit submission to the jurisdiction of a private tribunal – an explicit submission which, in the case of a foreign state, necessarily amounts to a waiver of jurisdictional immunity in connection with the arbitral proceedings themselves. But by consenting to arbitration, a sovereign state does not only submit to the tribunal’s jurisdiction, because what it truly submits to in an explicit manner is an “international system of justice” in which courts also have an essential and integral role to play. Indeed, arbitration, both domestic and international, is best characterized as a hybrid process in which adjudicative power is shared between arbitrators and judges: while arbitral tribunals are given an exclusive power to decide the merits as well as extensive powers over procedural issues and the management of arbitral proceedings, courts exercise crucial functions aimed at either assisting the arbitral process to ensure its effectiveness, or controlling the legality of the process. Conceiving consent to arbitration as an explicit submission to nothing more than the tribunal’s power fundamentally misconceives the nature and inherent characteristics of the process.[54] [References omitted; italics in the original]

[60] Thus, in the Court's view, it is appropriate to consider whether the waiver exception in paragraph 4(2)(a) of the SIA applies, as the application judge found. If this exception applies, it follows that India's state immunity defence must be rejected.