India: Indian Investor Awarded EUR 20 Million Compensation Under The India-Poland BIT

Last Updated: 22 November 2016
Article by Durga Priya Manda, Niyati Gandhi and Vyapak Desai


  • In the first award1 of its kind, an investment arbitration tribunal (Tribunal) has found in favour of an Indian Investor, against Poland, for the violation of the India-Poland Bilateral Investment Treaty2 (India-Poland BIT).
  • The Investor (headquartered in Dubai) chose to pursue the claim under the India-Poland BIT in place of the UAE-Poland BIT on account of its diluted nationality requirements. Such action, as according to the Tribunal, does not amount to illegal treaty shopping.
  • The Tribunal, awarding over EUR 20 million in compensation, held that the suspension of leases and key contracts by a Polish State-owned entity amounted to a violation of the Fair and Equitable Treatment (FET) and Expropriation provisions under the India-Poland BIT. 


The Claimant, an entity in the Flemingo Group (headquartered in Dubai) had acquired a majority stake in Baltona, a duty-free retailer in Poland. This acquisition also involved the transfer of key leases entitling Baltona to operate at the Chopin Airport in Warsaw. The Polish Airports State Enterprise (PPL), Poland's State-owned airport authority subsequently took various steps to unduly terminate these leases and evict Baltona from Chopin Airport.

In response, in August 2014, Flemingo Duty Free Shop Pvt Ltd initiated investor-State arbitration under the India-Poland BIT for the violation of the Fair and Equitable Treatment protection, as well as for expropriating Flemingo's investment without compensation.


There are two important issues that the Tribunal considered, while determining whether Flemingo had a valid claim under the India-Poland BIT -

  1. Whether the actions of PPL, a state-owned entity were attributable to the State i.e., Poland; and

  2. Whether the Claimant could seek proceedings under the India-Poland BIT, or was this a case of impermissible treaty shopping.

PPL's Actions are Attributable to Poland

Flemingo argued that PPL's acts of unduly terminating the licenses held by Baltona (which were subsequently transferred to Flemingo), were actions attributable to Poland. This is because PPL operates as a State-owned entity affiliated to and controlled by the Ministry of Transport (as well as the Ministry of Infrastructure and Development). Moreover, Poland had itself admitted that PPL "performs strategic functions for the existence of the State".

Poland, in response, argued that PPL was a state-owned enterprise which was not just an emanation of the State but was a self-financing and self-governing entity with separate legal personality.

With this in mind, the Tribunal still came to the conclusion that PPL's actions are attributable to Poland, as it is a State Organ under international law.

Can the Claimant seek relief under the India-Poland BIT?

The Claimant, a private company incorporated in India, argued that its indirect shareholding in Baltona by being a part of the Flemingo group, i.e. the fact that it owned a stake in Baltona was adequate to establish that it had standing under the India-Poland BIT.

The Respondent, on the other hand, argued that the Claimant neither participated financially in the acquisition of Baltona, nor was it directly related to Flemingo International (the entity that acquired Baltona) or its parent company. It further argued that the Claimant had never actually conducted business in Poland.

The Tribunal's position

At the jurisdictional and admissibility phase of the investment arbitration, the Tribunal readily accepted that PPL is a State Organ, as per the requirements set out in Art. 4 of the International Law Commission Articles on State Responsibility. Accordingly, its actions in unlawfully terminating the leases and other key contracts, were attributable to Poland.

Moreover, the Tribunal analyzed the nationality requirements for an "investor" under the India-Poland BIT. Article 1 para. 2 of the BIT provides, inter alia -

"2. The term "Investors" refers with regard to either Contracting Party to:

  1. natural persons having the nationality of the Contracting Party under the law in force of that Contracting Party;

  2. legal entities, including companies, corporations, firms and business associations incorporated or constituted or established under the law of a Contracting Party."

The Tribunal, appreciated the relaxed nationality provision in the treaty and found that the threshold under the treaty would be met as long as the Claimant is incorporated in India. This wording is similar to the wording found in the India-Mauritius Bilateral Investment Treaty [for a brief analysis on this point, refer to our hotline on the Antrix-Devas investment dispute under the India-Mauritius BIT here]

Having cleared the initial hurdles in the first phase of the investment arbitration, it was a straightforward matter for the tribunal to determine that PPL, and consequently, Poland, had wrongfully terminated the licenses and contracts which constituted the Claimant's investment. These actions amounted to expropriatory conduct, as well as violations of the FET threshold in the India-Poland BIT.

Is Forum Shopping legitimate?

Before any investment dispute goes into the merits, it is mandatory for a Claimant to establish that it is an "investor" and has a valid "investment" vis-à-vis the investment treaty which is invoked. In making such determination, tribunals consider the elements of control, as well as the substantiality of the investment that flows into the host State. However, both these considerations are subject to the provisions of the specific treaty in question and the facts of the case.

As an investor willing to initiate a potential investment treaty dispute against a country, there are various strategic options available; especially so, if the investor in question is part of a large and complex corporate group. The ability of a foreign investor to initiate proceedings under one treaty is specific to the wording of the treaty and the flexibility it offers, in terms of defining essential terms like "investment" and "investor". For instance, in this case itself, the parent company group is headquartered in UAE, with subsidiaries in India, which has limited stake in the investment made in Poland. Accordingly, a potential litigant would consider the benefits offered under the UAE-Poland Bilateral Investment Treaty3 (UAE-Poland BIT) and the India-Poland BIT, before initiating a dispute. In this instance the UAE-Poland BIT contains strict language on when an investment is granted protection. There are stringent requirements of "control" to be situated with a UAE entity, before such entity can legitimately initiate proceedings against the host state.4

The Tribunal in Flemingo considers this aspect, by analyzing the Claimant's choice in not initiating proceedings under the UAE-Poland BIT. The Tribunal, however, comes to the conclusion that since the India Poland BIT itself does not impose an additional threshold of either control, or the establishment of substantive commercial presence by the Claimant in the host state, a legitimate choice was exercised.

The Claimant was, in its own right entitled to protection under the India-Poland BIT. International law in itself, does not impose a restriction on future claimants from initiating dispute under the strategically most appropriate treaty. This is indeed, a monumental decision in advocating a rational approach to the oft called "vice" of treaty shopping.

Takeaways for Indian investors

This award is significant in its adding to a line of decisions expanding upon the attributability of the actions of a State Owned Entity to a State, which in itself opens the floodgates of investor-state disputes. In addition, this award is also significant being the first ever instance of an Indian investors successfully invoking the investor protections in an investment treaty against another country.

The wording of some of the treaties that India is party to, advocate for a relaxed dispute admissibility requirement, which opens up an additional layer of strategic options available to an investor who intends to initiate a dispute against another country. However if, India's agenda in reworking its Bilateral Investment Treaty (BIT) obligations to reflect its 2015 Model BIT standard is pushed in the international arena, it would prove difficult to not only incentivize foreign investors from approaching India as a treaty favourable jurisdiction, but will also impact the use of Indian treaties as open strategic tools. This is because, the 2015 Model BIT requiring a greater threshold of commitment in terms of establishing "investment", impacts an admissibility question that would affect the maintainability of the rest of the dispute as well.5


1. The award is available at

2. Text available at

3. Text available at

4. See Art. 1(4) read with Art. 1(7) of the UAE-Poland BIT. Contrast with Art. 1(2) of the India-Poland BIT

5. See Art. 1 of the 2015 India Model BIT available at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Durga Priya Manda
Niyati Gandhi
Similar Articles
Relevancy Powered by MondaqAI
Singhania & Partners LLP, Solicitors and Advocates
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Singhania & Partners LLP, Solicitors and Advocates
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions