CL-2022-000304 - [2025] EWHC 1553 (Comm)

In 1961 the Government of Andhra Pradesh incorporated Andhra Pradesh Mineral Development Corporation Limited (“APMDC Ltd”). In 2005 the Government of Ras Al Khaimah established RAKIA by Emiri Decree.

A Memorandum of Understanding (“the MOU”) dated 14 February 2007 (six years before the BIT) was entered into by the Government of Andhra Pradesh and the Government of Ras Al Khaimah. The Governments recorded that they did so following “a high level meeting” on 9 February 2007 at which “it was decided to establish Alumina and Aluminium Industry in the State of Andhra Pradesh”.

By a first recital the MOU recorded:

“WHEREAS, the State of Andhra Pradesh is having rich Bauxite Deposits in Visakhapatnam and East Godovari Districts, consisting of about 550 Million Tonnes of Metallurgical Grade Bauxite. Keeping its importance in view, the [Government of Andhra Pradesh] have reserved the entire deposit bearing areas available in E.G. District and Visakhapatnam District through GOMs No. 999 … for exclusive exploitation by the public sector undertaking.”

The first recital continued:

“Further, all these areas are falling under reserve forest as well as notified tribal areas. As per the AP Land Transfer Regulation, 1959, transfer of these areas to non-tribals is prohibited. Further, the Hon’ble Supreme Court of India in Samatha Vs State of A.P. case, gave the ruling that the State owned Corporation can mine these areas and in case State owned Corporations are involved in mining, it does not amount to transfer of the areas to non-tribals. Considering these facts, [the Government of Andhra Pradesh] is looking for a highly competent and financially sound entrepreneur who can establish value-added industry to produce end-products, based on these valuables, mined by APMDC Ltd.”

Among further recitals were these:

“WHEREAS, the [Government of Ras Al Khaimah], United Arab Emirates, which has got strong industrial exposure having a number of cement manufacturing companies in Ras Al Khaimah with an annual production capacity of 8 million tonnes, with extensive experience in mining, GORAK exports this High Grade Limestone to various countries including India.

Also the [Government of Ras Al Khaimah] has got a large exposure in generating of power and has a world class Ceramic Tiles manufacturing facility.

The [Government of Ras Al Khaimah] has three ports in Ras Al Khaimah with rich experience in handling Bulk Cargos and also has interest in onshore and offshore Oil Exploration.

With its vast industrial experience, the [Government of Ras Al Khaimah], UAE, has come forward to establish One Million Tonnes Alumina Plant with 2 50,000 Tonnes Aluminium Smelter with a provision to double its capacity in the State of Andhra Pradesh by using the Bauxite resources available in the State. They intend to bring in the best energy efficient and best Aluminium technology available in the world.”

Clause I of the MOU recorded that the parties had “a vision to augment growth and development in the State of Andhra Pradesh”, and that the MOU set out “the terms, obligations and commitments to be performed jointly and/or severally.”

By clauses II to X of the MOU:

“II. [The Government of Ras Al Khaimah] and its Investment Authority [i.e. RAKIA] along with their Associates or its successors undertake to incorporate an Indian Registered Limited Company (hereinafter referred to as the said Alumin[i]um Company) which will set up an Alumina and Aluminium Refinery and Smelter to produce One Million Tonnes Alumina and 2,50,000 [sic] Tonnes of Aluminium per annum initially, with a provision for suitable expansion, in the state of Andhra Pradesh at the locations other than the Scheduled Areas mutually agreed to by the two parties and with a capital outlay of about $2 Billion USD.

III. [The Government of Andhra Pradesh] shall direct APMDC [Ltd] to supply Bauxite from out of the areas available in the Jerrala group of deposits, Chintapalli Mandal spread over 1649 hectares with probable reserves of 224 Million Tonnes of bauxite ore for the use of the said Aluminium Company at the price as fixed by a Committee formed by [the Government of Andhra Pradesh], based on cost of production uninterruptedly as long as the industry is in operation. APMDC [Ltd]/[the Government of Andhra Pradesh] shall not sell or export Bauxite from Jerrala deposit to any other party during the period of operation of the said Aluminium Company.

IV. APMDC [Ltd] shall pursue the applications already filed by them with [the Government of Andhra Pradesh]/ [the Government of India] for forest and environmental clearances required and get the mining lease cleared for the Jerrala bauxite deposit. The entire expenditure incurred by the APMDC [Ltd] for obtaining various clearances including payment of net present value to Forest Department shall be borne by the said Aluminium Company.

V. The said Aluminium Company or its subsidiary shall identify suitable land other than the land in Scheduled Areas for establishment of the alumina-aluminium plant. The same will be acquired and handed over to the said Aluminium Company by [the Government of Andhra Pradesh/Collector], to the extent required by the company. The said Aluminium Company shall bear the cost. [The Government of Andhra Pradesh] will act as facilitator to create infrastructure like development of Roads between the factory and Bauxite Mines at Jerrala Village of Chintapalli Mandal and other infrastructure amenities like water supply, power and other requirements for establishment of the industry, the cost of which will be borne by the said Aluminium Company.

VI. The said Aluminium Company shall not depend on power supply and shall go in for captive power generation facility for uninterrupted power supply to the plant. However, from construction stage till the time of commissioning of plant, [the Government of Andhra Pradesh] shall provide adequate power supply during construction of the said Aluminium Company and the backup grid support facility during regular operations as per the rules & tariffs approved by the Andhra Pradesh Electricity Regulatory Commission (APERC).

VII. The said Aluminium Company shall offer equity to APMDC [Ltd] in the said Aluminium Company at the percentage as may be decided by the Committee appointed by the [Government of Andhra Pradesh] under Para III.

VIII. APMDC [Ltd] shall procure the required machinery for mining either on its own or on hire basis whichever is found economical. The hire charges shall be fixed by a committee as appointed by [the Government of Andhra Pradesh] under para III by taking prevailing rates.

IX. APMDC [Ltd]/ The Aluminium Company shall train the local tribals identified by the Department of Tribal Welfare in mining/allied subjects for making use of them in the proposed project and ultimately absorb them in the mining operations/industry as the case may be as far as possible. Schooling and health facilities will also be provided to the local tribal for their advancement. A minimum of 0.5% of revenue from the value added project shall be spent on the health, training, social infrastructure and welfare of tribals by the said Aluminium Company.

X. [the Government of Andhra Pradesh] shall provide exemptions to the project from entry tax octroi/ other tax incentives and exemptions as being extended by [the Government of Andhra Pradesh] for mega fast track projects.”

The MOU further provided by clause XI:

“There shall be a detailed collaboration agreement between APMDC [Ltd] and the said Aluminium Company within the framework of this MOU within one month from the granting of Mining Leases. This MOU is subject to additions and/or variations and/or deletions with the mutual consent in writing of both the parties hereto and shall come into force from the date of its signing by the parties hereto and shall remain valid for three years or till the commencement of commercial production (whichever is earlier) or till either of the parties mutually agree to sever the arrangement, or this MOU is superceded by a detailed internal agreement as envisaged in para above [sic].”

Clause XII was in these terms:

“XII. APMDC [Ltd] shall allocate 20% of the net profit it earns from Bauxite mining to the tribals which does not include the expenditure for reforestation and maintenance of ecology, and for the purpose as provided in the Samatha case and the mining operations shall be strictly as per the principles laid down in the said Samatha judgment.”