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Mumbai , Sept. 9

AN independent arbitration panel has determined that the Indian Government and its agents violated international law through an unlawful taking of GE and Bechtel's investments in Dabhol Power Company, while ordering an award of $28.57 million each to GE and Bechtel, to be paid to them by their political risk insurer, the Overseas Private Investment Corporation, an agency of the US Government.

A joint news release from GE and Bechtel announcing the above also said: "The companies also reported that under the terms of their insurance contracts, this action would likely to trigger US government claim against the Government of India for recovery of the companies' investments in DPC under an investment treaty between both governments."

The arbitration panel, chaired by a former US District Court judge, has ruled unanimously that the interests of GE and Bechtel, each of which holds 10 per cent equity in the Enron-sponsored DPC, "were improperly expropriated by the Indian Government," said the release.

"We will continue to pursue a full recovery of our investment through all available means," said Mr Rick Smith, Executive Vice-President, Bechtel Enterprises. "We are very pleased that this distinguished panel decided in our favour and concluded that the actions of the State of Maharashtra and the Government of India violated international law and that they took our property without compensation."

According to the release, among the significant findings of the tribunal are that "the evidence clearly demonstrates that the Maharashtra State Electricity Board, the Government of Maharashtra and the Government of India violated the Power Purchase Agreement, their guarantees, and the State Support Agreements, for political reasons and without any legal justification".

Another finding of the tribunal pointed out by the news release says "the Maharahstra Electricity Regulatory Commission, the MSEB, Indian Financial Institutions and the Indian courts have enjoined and otherwise taken away the claimants' (GE and Bechtel) international arbitration remedies under the PPA, all in violation of the established principles of international law, in disregard of India's commitments under the UN convention as well as the Indian Arbitration Act."

The companies "reiterated their willingness to aid in the restart of the Dabhol plant, now idle for more than 24 months, saying a successful re-commissioning of the plant would help resolve the remaining disputes and ultimately benefit the people and the businesses of Maharashtra who urgently need electrical output from the power plant".

GE and Bechtel have repeatedly indicated to the Union Government and the financial lenders, both foreign and domestic, that they were willing and anxious to assist in the restart of Dabhol Phase I and the completion of phase II, as long as the companies are treated fairly," said Mr Scott Bayman, President, GE India.

"We have been disappointed by the lack of progress toward a negotiated settlement. And, unfortunately, our legal rights have been blocked at every turn in India. This binding arbitral award by an impartial tribunal reaffirms our position, and is just one of many avenues that we will pursue to recover our investments and construction contractor claims."

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