India Asked to Pay Up for Failed Enron Investment
A group of seven offshore banks have initiated formal arbitration
proceedings against the Indian government under the bilateral investment
treaties for its failure to protect their loans totalling $291 million
to the Dabhol Power Project following the closure of the plant in
The banks incorporated in Austria, France, Switzerland, the Netherlands
and the United Kingdom claim that the government had failed to comply
with its international obligations under the investment treaties between
these countries and India.
If the claims are upheld, India would be liable to pay compensation
equal to the outstanding loans plus interest, default interest and
expenses, a release issued by Dua
Associates on behalf of the offshore members of the Dabhol Steering
Committee and other offshore lenders, said on Friday.
The claims arise out of "problems affecting the project and reflect
the lack of progress by the government over the last three years to
agree to a solution that recognises both the political nature of these
problems and the rights of the offshore lenders", it said.
These claims can only be brought by lenders incorporated in countries
that have investment treaties with India, but the claims are supported
by the offshore members of the Dabhol Steering Committee, including
Overseas Private Investment Corporation of the United States and five
major international banks, it added.
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