The Federal Court rethinks an Indian reservation

In the last few years, Australia has become a popular destination for companies seeking to enforce investment treaty awards against foreign States – especially the ongoing battle between Spain and Infrastructure Services Luxembourg, and now the claims of CCDM Holdings against India.  This is creating a growing body of law in the previously obscure (in Australia, anyway) area of the intersection between foreign state immunity and investment treaty arbitration.  On 31 January, the Full Federal Court (Sarah C Derrington, Stewart and Feutrill JJ) delivered judgment in CCDM Holdings v Republic of India ([2025] FCAFC 2), the most recent case to consider the application of foreign state immunity to the attempted enforcement of an investment treaty award.

CCDM Holdings is a Mauritius company that brought a claim against India following the cancellation of a contract for the lease of satellite communication spectrum bandwidth.  The claim, under the Mauritius-India bilateral investment treaty, was successful, and the tribunal awarded damages of more than US$11 million.  CCDM has since sought to enforce that award in several different countries, including Australia.

In October 2023, Jackman J, in the Federal Court, rejected an application by India to set aside the originating process by which CCDM sought to enforce its award in Australia.  That application required a consideration of Australia’s Foreign States Immunities Act (1985), section 9 of which provides that “Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding.”  One exception, set out in section 10, is that the foreign State has submitted to the jurisdiction of the courts of Australia.  CCDM argued that India had submitted to the jurisdiction of the Australian courts by ratifying the New York Convention of 1958, which facilitates the recognition and enforcement of international arbitration awards.

India accepted that it had ratified the New York Convention, but pointed out that it had done so with a reservation – that it would “apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the Law of India”.  Jackman J concluded that this reservation was irrelevant to Australian proceedings, since “Australia did not make any such reservation and Australia is the State where recognition and enforcement is presently sought”.

The Full Court disagreed.  It concluded that the reservation operated reciprocally, with the effect that India did not waive any immunity it had in resect of the enforcement of an award that did not arise from a commercial contract.  The Full Court also accepted India’s argument that an investment treaty award, of its nature, arises from an act of government, rather than a commercial dealing.

All of which means that, as things currently stand, an investment treaty award obtained against the Republic of India cannot be enforced in Australia under the New York Convention.  But these cases have a habit of finding their way to the High Court, so CCDM may yet have one more opportunity to turn its award into something more than an impressive sheaf of paper.