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AgustaWestland Nominates B.N. Srikrishna to Arbitrate Dispute with Indian Government

Thursday, November, 21, 2013


 

AgustaWestland, a unit of Italian defense contractor Finmeccanica based in the United Kingdom, has nominated former Indian Supreme Court Judge B.N. Srikrishna to arbitrate its dispute with the Indian government concerning the suspension of payments and shipments for helicopters produced by the company.

 

The Indian government ordered twelve AW101 helicopters in 2010.  The Indian government froze payments in February over allegations that AgustaWestland had bribed government officials in order to secure the contract.  The total value of the helicopter contract has been stated as €556 million; no figures have been released concerning the amount paid by the Indian government or the number of helicopters actually delivered by AgustaWestland.  Both the Indian and Italian governments launched investigations into the allegations.  On October 21, the Indian government gave a final notice of cancellation to AgustaWestland and required a response within 21 days, later extended to 36 days.

 

AgustaWestland announced it was pursuing arbitration proceedings against the Indian government on October 4.  The Indian government asserts that the case is not appropriate for arbitration because the alleged criminal activity occurred prior to the signing of the contract.  AgustaWestland has stated that it took the unusual step of nominating an arbitrator without an arbitration agreement in place because it had not received any response to its requests for negotiations with the Indian government since the spring when the payments were initially frozen.

 

If the arbitration process were to continue, the next step would be for the Indian government to nominate their own arbitrator and then for both parties to agree on a third panelist for the arbitration board.  However, the likelihood that AgustaWestland can compel this from the Indian government, especially as they are under investigation on two continents, remains unclear.