Before The Honourable Supreme Court of Indiana

101A
BEFORE THE HONOURABLE SUPREME
COURT OF INDIANA
STATE OF DELAWARE AND NORTH ATLANTIC

EDISON INC
VS
THERMAL POWER CORPORATION (TPC)
TILA INTERNATIONAL MOOT COURT
COMPETITION ON ENERGY (TIMCEE) 2018
MEMORANDUM ON BEHALF OF THE PETITIONER
-DRAWN AND FILED BY THE COUNSEL FOR THE PETITIONER-

TABLE OF CONTENTS
1
MEMORIAL ON BEHALF OF THE PETITIONER

A. TABLE OF CONTENTS ..............................2
B. INDEX OF AUTHORITIES ..............................6
C. STATEMENT OF JURISDICTION ..............................13
D. QUESTIONS PRESENTED ..............................14
E. STATEMENT OF FACTS .............................15
F. SUMMARY OF PLEADINGS .............................18
G. PLEADINGS .............................21
1. IS THE APPELLANT (STATE OF DELAWARE) JUSTIFIED IN SEEKING FOR THE
CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT WITH
THERMAL POWER CORPORATION? .............................21
1.1 LONG TERM POWER PURCHASE AGREEMENT ………………….21
1.2. GOVERNMENT RIGHTS TO CANCEL AN LONG TERM POWER
PURCHASE AGREEMENT BASED ON PUBLIC GOOD …………………22
1.2.1. PROOF THAT THE LONG TERM POWER PURCHASE AGREEMENT ISAGAINST
THE PUBLIC GOOD …………………22
1.3. THE LONG TERM POWER PURCHASE AGREEMENT IF NOT CANCELLED WILL
BECOME ULTRAVIRES TO CONSTITUTION ………………….23

1.3.1. ARTICLE 14&15 IN THE CONSTITUTION OF INDIA, 1950 ...…………..24
1.4. THE LONG TERM POWER PURCHASE AGREEEMENT INCREASES
THE DEBT BURDEN OF THE APPELANTS COMPANY …………….25
1.5. THE QUALITY OF SERVICE PROVIDE WILL BE ENHANCED IF THE
AGREEMENT IS CANCELLED
…………….26
1.6. SURPLUS AMOUNT OF POWER WILL ACCUMULATE IF THE
AGREEMENT IS NOT CANCELLED ……………27
1.7. THE CANCELLATION OF AGREEMENT MUST BE DONE TO
MITIGATE THE LOSSES ……………….28
2. WHETHER NORTH ATLANTIC EDISON INC IS CORRECT IN APPROACHING
THROUGH UK GOVERNMENT TO SEEK RELIEF UNDER BILATERAL
AGREEMENTS? .......................29
2.1. OVERVIEW OF BIPA ......................29
2.2. NORTH ATLANTIC EDISON INC COMES UNDER THE AMBIT OF BIPA...............30
2.2.1. COMPANY ....................32

3

2.2.2. INVESTMENT ...................32
2.3. PROMOTION AND PROTECTION OF INVESTMENT ….................33
2.3.1. FAVOURABLE CONDITIONS .....................33
2.3.2. FAIR AND EQUITABLE TREATMENT …..................35
2.4. NATIONAL TREATMENT …..................39
2.5. DISPUTE SETTLEMENT ......................40
2.5.1. SETTLEMENT THROUGH NEGOTIATION .....................43
2.5.2. CONCILIATION UNDER UNITED NATIONS COMMISSION ON
INTENATIONAL TRADE LAW .......................44
2.5.3. APPROACHING ARBITRAL TRIBUNAL .....................44
3. DO STATE GOVERNMENT HAVE ANY OTHER OPTION TO DEAL WITH THE
SITUATION RATHER THAN CANCELLING THE LONG TERM AGREEMENTS?
………..........45
3.1. DIFFICULTIES ARISING OUT OF THE LONG TERM POWER PURCHASE
AGREEMENT ......................47

3.1.1. COST ON BUYING POWER ….................47
3.1.2. ACCUMALATION OF REGULATORY ASSET ........................48
3.1.3. CONSUMERS WILL BE BILLED ............................49
3.1.4. HEAVY LOSS TO NORTH ATLANTIC EDISON ............................49
3.1.5. ALTERNATE REMEDIES AVAILABLE .............................50
3.1.5.1. UJWAL DISCOM ASSURANCE YOJANA (UDAY) .........................50
3.1.5.2. RENOGOTIATION OF THE POWER PURCHASE AGREEMENT …....................51
3.1.5.3. REMOVAL OF TARIFF FREEZING ...............................52
3.1.6. TERMINATION IS THE ONLY FEASIBLE OPTION ...........................53
H. PRAYER FOR RELIEF ..............................55
INDEX OF AUTHORITIES
5

STATUTES REFERRED :
S.NO STATUTES REFERRED YEAR PAGE NO
1. ELECTRICITY RULES 2003 ART 1
2. CONSTITUTION OF 1950 ART 14 &15
INDIA
3. UNITED NATIONS 1976. ARBITRATION RULES
COMMISSION ON
INTERNATIONALTRADE
LAW,
4. INTERNATIONAL 1965 PASSIM
CENTRE FOR THE
SETTLEMENT OF
INVESTMENT DISPUTES
BOOKS REFERRED
S.NO NAME OF THE BOOKS AUTHOR EDITION&

6

PUBLICATION
1 ENVIROINMENTAL LAW STUAT BELL & 5TH
DONALD EDITION ,OXFORD
MCGILLIVRAY PUBLICATION
2 ENVIROINMENTAL ALEXANDRE KULWER LAW
NEGOTIATOR HANDBOOK TIMOSHENKO INTERNATIONAL
3 ENCYCLOPEDIA OF G.R ANMOL
ENVIROINMENTAL ENERGY CHHATWAL PUBLICATIONS
RESOURCES
4. INDIAN CONSTITUTIONAL M.P JAIN 7TH EDITION,LEXIS
LAW NEXIS
5. ENERGY LAW IN INDIA MOHAMMED KULWER LAW
NAZEEM INTERNATIONAL
INDIAN CASE LAWS
S.NO INDIAN CASES CITATION
1 M/S BAJAJ ENERGY LIMITED (FORMERLY Petition No.1258/2017,
BAJAJ ENERGY PRIVATE LIMITED) VS U.P. 1259/2017, 1260/2017,
1261/2017 & 1262/2017

POWER CORPORATION LTD.
2 DHAMPUR SUGAR (KASHIPUR) LTD. VS. 2007- 8 SUPREME COURT
STATE OF UTTARANCHAL AND OTHER CASES 418
3 MAHARASHTRA POWER DEVELOPMENT . [2003] 117 COMP. CAS
CORPORATION VS DABHOL POWER CO. 467
AND ORS
4 KASINKA TRADING AND ANOTHER VS. 1995 SUPREME COURT
UNION OF INDIA AND OTHER CASES 274
5 RADHAKRISHNA AGARWAL & ORS VS AIR 1977 SC 1496
STATE OF BIHAR& ORS
6 RE SPECIAL COURTS BILL AIR 1979 SC 478, (1979) 1
SCC 380, 1979 2 SCR 476
7 UNION OF INDIA AND ANR VS AZADI 7 OCTOBER 2003
BACHAO ANDOLAN AND ANR
TREATIES /CONVENTIONS/CONFRENCE REFERRED
S.NO TREATIES/CONVENTIONS/ YEAR PG.NO

CONFRENCE
1 BILATERAL INVESTMENT 1995 PASSIM
PROMOTION AND PROTECTION
TREATY (BITS)
2 THE UNITED NATIONAL CONFERENCE PASSIM
ON TRADE AND DEVELOPMENT
3 BIT BETWEEN HUNGARY AND (2001) ARTICLE 2(2)
LEBANON
4 BIT BETWEEN BANGLADESH AND THE 2001 ARTICLE 4
IS
5 BIT BETWEEN CAMBODIA AND CUBA 2001 ARTICLE II (2)
(2001)
FOREIGN CASES REFERRED
S.NO FOREIGN CASES CITED CITATION/PARA
1 BIENVENU V. INSURANCE CO 33 LA. ANN. 212.
2 QUESTAR BUILDERS, INC. V. CB FLOORING LLC, 978 A.2D 651, 675-76,

410 MD. 241, 281-82 (2009),
3 SALLIER V. ROSTEET. . 108 LA. 37S, 32 SOUTH
3S3;
4 STRATEGIC OUTSOURCING, INC. VS. 2005 WL 233 3924
CONTINENTAL CASUALTY COMPANY
5 UNITED STATES VS CORLISS STEAM 91 US 321 (1875)
ENGINE COWHEREIN
6 WASTE MANAGEMENT NO. 2 V. , PARA 98, PARA 7.108
MEXICOSEE MCLACHLAN, SHORE, P237
WEINIGER,
INTERNATIONAL COURT OF JUSTICE CASES REFERRED
S.N CASE CITATION
1 ELETTRONICA SICULA S.P.A. (ELSI) (US. V. 1989, I.C.J. 15, REPRINTED
ITALY), IN 28 INTERNATIONAL
LEGAL MATERIALS 1109.
2 INTERNATIONAL THUNDERBIRD GAMING V. UNCITRAL (NAFTA),
MEXICO, FINAL AWARD 26
JANUARY 2006, PARAS
163‐166,
10

3 OIL PLATFORMS JUDGEMENT [1996] ICJ REP 847 [39]
ARBITRATION CASES AWARDED
S.NO CASES CITATION
1 ADF GROUP V. UNITED STATES ICSID Case.No .IRD
(AF)/00/1
2 CMS V ARGENTINA ICSID CASE NO.ARB/01/8
3 CME V CZECH (2006)9ICSID Rep 264
4 INTERNATIONAL THUNDERBIRD IIC 136 (2006)
GAMING V. MEXICO,
5 ENRON V. ARGENTINA, ICSID CASE NO.ARB/01/3
6 LG&E ENERGY CORP., LG&E CAPITAL (ICSID Case No. ARB/02/1),
CORP. AND LG&E INTERNATIONAL INC.
V. ARGENTINE REPUBLIC
7 OCCIDENTAL V. ECUADOR LCIA CASE NO UN3467
8 PETROBART V. KYRGYZ REPUBLIC SCC CASE.NO.126/2003
9 PSEG GLOBAL V. TURKEY. ICSID CASE NO.ARB/02/5
10 SALUKA V. CZECH REPUBLIC IIC 210(2006)
11 SD MYERS V. CANADA (2001) 40 ILM 1408

11

12 WASTE MANAGEMENT NO. 2 V. ICSID CASE
MEXICOSEE MCLACHLAN, SHORE, NO.ARB(AF)/00/3
WEINIGER,
DYANAMIC LINKS
http://www.unctad.org/en/docs/iteiia20065_en.pdf
www.indiankannon.org
www.scconline.com
www.manupatra.com
www.heinonline.net
12

STATEMENT OF JURISDICTION
The Hon’ble Supreme Court of Indiana has the jurisdiction in this matter under
Article 136 of the Constitution of Indiana which reads as follows:
“136. Special leave to appeal by the Supreme Court
(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence or order in any
cause or matter passed or made by any court or tribunal in the territory of India
(2) Nothing in clause ( 1 ) shall apply to any judgment, determination, sentence or order passed
or made by any court or tribunal constituted by or under any law relating to the Armed Forces”
13

QUESTIONS PRESENTED
1. IS THE APPELLANT (STATE OF DELAWARE) JUSTIFIED IN SEEKING FOR THE
CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT WITH
THERMAL POWER CORPORATION?
AGREEMENTS?
14

STATEMENT OF FACTS
1. Delaware Electricity Board (DEB) was a state run electricity distribution firm, which was
low in operating efficiency and was running in heavy losses. So it was disbanded in 2003,
as part of reforms in the power sector, to increase the efficiency of power distribution and
to ensure uninterrupted power supply in the city.
2. In the year 2003, under a competitive bidding Delaware Electricity Board was privatized
and was taken over by North Atlantic Edison Inc, an UK based energy company.
3. During the past years, privatization of electricity discom has delivered intended results,
reduction in losses and improved operating efficiency. Deficit situation in Delaware has
improved in terms of both peak and energy deficit. However, government have tended to
disadvantage private discom by freezing tariffs for period resulting in accumulations of
regulatory assets. Power purchase cost has increased threefold since the electricity
distribution has been privatized, whereas the tariffs has risen only 90% so far.
4. One of the foremost reasons for higher cost of distribution of electricity has been the rate
at which the electricity is being purchased from the state run electricity generating
15

company, Thermal Power Corporation (TPC). Actually before privatization, Delaware
Electricity Board had entered into 30 year long power purchase agreement with Thermal
Power Corporation, however, the private power distribution companies were made to
comply with various pacts that Delaware Electricity Board had signed with central
government entities. Presently, Delaware discom’s has to incur 60% more cost on buying
power compared with other states because of the long-term power purchase agreements.
5. Due to the high power purchasing cost, power thefts and bill collection inefficiencies in
past years have risen aggregate technical and commercial –AT&C—losses to the private
discom. Now the private discom in Delaware, North Atlantic Edison Inc., have regulatory
asset of nearly 15000cr, as per an estimate the electricity prices in Delaware would need
to hike tariff by 10 % every year for 5 years for liquidation of regulatory assets.
6. North Atlantic Edison Inc., concerted efforts to reduce their power purchase cost,
including replacement of costly long-term power purchase agreements that were signed
by their predecessor Delaware Electricity Board before its privatization in 2003 with new
ones from efficient and cost-effective power plants. This was needed because the said
agreement reduced their ability to give quality services.
7. Long term Power purchase agreements needs to be scrapped to bring down the power
rates. Presently, power is bought at Rs. 4 – Rs. 4.8 per unit by Delaware discom, whereas
many new private companies have come up with offers as low as Rs. 2.5-3.0 per unit in
five year agreement. Higher costs of power purchased from the Thermal power
Corporation, is ultimately being billed to the consumers of Delaware.
16

8. In 2015 there has been a change in government of Delaware, and the new government
wants to cancel the existing power purchase agreements entered into by the previous
government, so that the benefit of lower cost can be transferred onto the consumers. The
Central Electricity Regulator of Indiana, allowed the petition of the Delaware on
suspending long term purchase power agreements. However, on the appeal filed by the
Thermal power Corporation, the Appellate Tribunal of Electricity rejected the claim of
Delaware, now the state of Delaware has approached the Honourable Supreme Court of
Indiana. Separately North Atlantic Inc. has requested the UK Government to invoke the
provision of Bilateral Investment Promotion & Protection Treaty to international
commercial arbitration against the government of Indiana.
17

SUMMARY OF PLEADINGS
1. IS THE APPELLANT (STATE OF DELAWARE) JUSTIFIED IN SEEKING FOR
THE CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT WITH
THERMAL POWER CORPORATION?
It is most humbly submitted before this Hon’ble Supreme Court that the act of the
Government of Delaware seeking for cancellation of the power purchase agreement
entered with Thermal Power Corporation is justified. The termination of the agreement
becomes important taking consideration of the supervening public good and to mitigate
losses of the company. The cancellation of the Agreement is detrimental to the consumers
of the appellant’s company. If the agreement is not cancelled then it would lead to
various evil implications for the consumers to the State of Delaware. If the agreement is
not cancelled it will lead to a situation where Electricity will become a valuable asset and
which people cannot afford and consequently they will be deprived of electricity while
the other states receive it at a lower rate which is against Article 14 & 15 of the
18

Constitution of Indiana. Therefore, the cancellation of power purchase agreement is must
for public good and hence the act of government seeking for cancellation is justified.
AGREEMENTS?
It is most humbly submitted before this Hon’ble Court that North Atlantic Edison
Inc’s approach through UK Government to seek relief against the Government of Indiana
through Bilateral Investment Promotion & Protection Treaty is correct and justified.
North Atlantic Edison Inc is entitled under the provisions of Bilateral Investment
Promotion & Protection Treaty to claim for arbitration. According to Article 1 of BIPA
North Atlantic Edison Inc. acquires the status of a company and consequently they
become investors. The Government of Indiana had violated the provisions of the treaty.
The main of the treaty is to encourage foreign investors to invest in a State and there by
contributing towards overall developments and advancements of the economy. And
accordingly, creation of favourable conditions, fair and equitable treatment and national
treatment are some of the key factors present in the treaty. The Republic of Indiana had
accordingly created some favourable conditions prior the investment was made by North
Atlantic Edison Inc but after the acquisition of Delaware Electricity Board by North
Atlantic Edison Inc. those conditions were not provided by the government of Indiana.
With regard to fair and equitable treatment the Government of Indiana had discriminated
North Atlantic Edison Inc. and also it created unstable business environment which all
19

collectively resulted in violation of fair and equitable treatment and national treatment.
Therefore, it is humbly submitted before this Hon’ble Court that the act of North Atlantic
Edison Inc. approaching through UK Government invoking the provisions of BIPA is
justified.
3. DO STATE GOVERNMENT HAVE ANY OTHER OPTION TO DEAL WITH
THE SITUATION RATHER THAN CANCELLING THE LONG TERM
AGREEMENTS?
It is most humbly submitted before this Hon’ble Supreme Court there is no other
alternative remedy available to the government of Delaware which will be more effective rather
than cancelling the long term power purchase agreement. The long term power purchase
agreement has encumbered North Atlantic Edison Inc with numerous disadvantages and
inefficiencies. Due to high power purchase cost, power thefts and bill collection inefficiencies
have raised which resulted in AT&C Losses. Regulatory assets are building up in the books of
North Atlantic Edison Inc. These losses are ultimately being billed to the consumers of the State
of Delaware. The other alternative remedies available are UDAY Scheme, Renegotiation of
Power Purchase Agreement, and removal of tariff freezing. All these alternative remedies clearly
shows that they cannot be applied in the present case since the circumstances under this case are
more fierce and even though these remedies are applied the results will not provide with efficient
20

results when compared with the results of terminating the power purchase agreement.. Therefore,
after ascertaining all the possible alternative remedies, the termination of the long term power
purchase agreement is the only best possible way to reduce the losses of North Atlantic Edison
Inc. and also to prevent the evil consequences which would arise if the power purchase
agreement is continued.
PLEADINGS
1. IS THE APPELLANT JUSTIFIED IN SEEKING FOR THE LONG TERM
POWER PURCHASE AGREEMENT WITH THERMAL POWER
CORPORATION?
It is most humbly submitted before this Hon’ble Supreme Court that the long term agreement
contracted with thermal power corporation is detrimental to both the appellant company and the
consumers. Hence the appellant seeking for cancellation of the long term agreement contracted
with thermal power corporation is justified under the following grounds
1.1. LONG TERM POWER PURCHASE AGREEMENT
The power purchase agreement is a type of third party ownership financing model where
there is a two party contract. The Power purchase Agreement is a legal contract between the
electricity generator and power purchaser host. The power purchase agreement includes its
recitals and schedules, amended or modified from time to time in accordance with terms thereof
1
. The Power purchase Agreement is mere a contract executed between the parties and the parties
1
Article 1 of electricity rules, 2003
21

are bound by the terms and conditions and consequences as mentioned in the agreement are to
follow in case any breach or default is determined by a judicial forum.2
1.2. GOVERNMENT RIGHTS TO CANCEL AN LONG TERM POWER
PURCHASE AGREEMENT BASED ON PUBLIC GOOD:
The government can cancel the long term power purchase agreement for the supervening public
interest and for the public good.
1.2.1. PROOF THAT THE LONG TERM POWER PURCHASE AGREEMENT IS
AGAINST THE PUBLIC GOOD:
The higher power purchase cost will in turn result in higher cost of distribution by the appellant
company. Higher cost of distribution will result in actual cost of purchasing power reflecting in
the regulatory tariff of the consumers. This increases the regulatory tariff will provide shock and
dissatisfaction to the consumers. In order to liquidate the regulatory assets the tariff must be
hiked 10% every year for 5 years3
Hence there will be a rise in regulatory assets coupled with hike of 10% in tariff every year to
compensate the higher power purchase cost spent on purchasing power from the thermal power
corporation which will sum up to an exorbitant amount that needed to be paid as a tariff which
will not be affordable by lower and middle classes of the society. The lower and the middle
M/s Bajaj Energy Limited (Formerly Bajaj Energy Private Limited) vs U.P. Power Corporation
2
Ltd.
3
As given in fact sheet pg no 2
22

classes of society will be deprived of electricity. “Electricity” will become a asset at an
unaffordable rate .All sectors will be affected. “Blackouts” will become more frequent. Power
Cuts will also be recurrent.
In the case of Kasinka Trading and Another Vs. Union of India and other4 The Hon’ble
Court has held that fundamental principles of Equity to be kept in mind by court and
applicability of doctrine of promissory estoppel does not apply on actions of the Govt. when such
an action is meant for interest of general public good.
With reference to the case of Dhampur Sugar (Kashipur) Ltd. Vs State of Uttaranchal and
Other5, it was held that t the Govt. has power to frame and reframe, change and re-change adjust
and re-adjust policy therefore the action of the Govt. cannot be declared illegal, arbitrary or ultra
vires to the provisions of the Constitution
1.3. THE LONG TERM POWER PURCHASE AGREEMENT IF NOT
CANCELLED WILL BECOME ULTRAVIRES TO CONSTITUTION:
In future The people of state of Delaware will not be able to afford electricity due to the
higher amount of tariffs collected in response to higher power purchase cost as a result of long
term power purchase agreement .The people of the state of Delaware will be deprived of
4
(1995 Supreme Court Cases 274)
5
(2007- 8 Supreme Court Cases 418)
23

electricity while people in other states will have “Electricity” at affordable rate which is against
article 14 of the constitution of Indiana.
1.3.1. ARTICLE 14&15 IN THE CONSTITUTION OF INDIA 1949
ARTICLE 14: Equality before law:” The State shall not deny to any person equality
before the law or the equal protection of the laws within the territory of India.”
ARTICLE 15: Prohibition of discrimination on grounds of religion, race, caste, sex or place of
birth.
The people will be deprived of electricity .This discrimination of “electricity” will be based on
the grounds of place of birth. This will render the long term power purchase agreement ultra
vires to the constitution which will become the basis of the constitution if not cancelled.
“The underlying principle of the guarantee of Art. 14 is that all persons similarly circumstanced
should be treated alike both in privileges conferred and liabilities imposed6., Chandrachud, J.,
observed:
” Basic principles of Article 14 were also applied to Government contracts by holding that it
imports a limitation and imposes an obligation upon the State‘s executive powers under Article
298”7. Hence the cancellation of long term power purchase agreement contracted with thermal
power corporation needs to done to avoid deprivation of electricity to people of Delaware .
6
Re Special Courts Bill, 1978
7
Radhakrishna Agarwal & ors vs State of Bihar& ors in AIR 1977 SC 1496
24

1.4. THE LONG TERM POWER PURCHASE AGREEEMENT INCREASES
THE DEBT BURDEN OF THE APPELANTS COMPANY:
The thermal power corporation charge higher rates compared to many other power
procurement companies in their long term power procurement agreements. They are also
incurring 60% more cost on buying power compared with other states because of the long term
power purchase agreements8.
The regulated power tariff charged to the consumers at the present time does not reflect the
actual cost of power purchase. For every unit of the current supplied the debt of the appellants
company is raising as the higher cost of power purchase is not collected from the consumers .The
increasing debt burden is detrimental to the private discom .
The debt burden of the company can be decreased only when the huge amount spent on
power purchasing by the company must be decreased. Changing the higher power purchase cost
to lower power purchase cost in the present power purchase agreement contracted with thermal
power corporation is not possible since the prices are always fixed in long term PPA’s.
In the case of United States vs Corliss Steam Engine Cowherein9 the Court
acknowledged the government’s right to terminate a contract when completion of the contract is
not in the government’s best interest. Not cancelling the contract will also affect the company’s
8
as given in fact sheet page no 2
9
91 US 321 (1875)
25

status and will completely lead to disbandment of the company which will affect the government
best interest to benefit the people by providing electricity
After cancelling the long term agreement a short term agreement offering low power
purchase cost can be contracted to reduce the debt burden of the appellant’s company
1.5. THE QUALITY OF SERVICE PROVIDE WILL BE ENHANCED IF THE
AGREEMENT IS CANCELLED
Poor electricity supply is widely recognized as a key impediment to firm growth and
productivity. More than 80% of total revenue of the appellant’s company goes into purchasing
power, which reduces their ability to give quality services. No amount goes into saving. No
amount is invested into infrastructure maintenance, leading to supply disruptions which leads to
loss of electricity
Blackouts will become frequent. Power cuts will be become frequent. certain critical
infrastructures such as telecommunication networks, financial services, water supplies and
hospitals which needs electricity round the clock will be affected .
Hence the agreement needs to be cancelled to upgrade the quality and to prevent poor
electricity supply in future.
26

1.6. SURPLUS AMOUNT OF POWER WILL ACCUMULATE IF THE
AGREEMENT IS NOT CANCELLED
If the quality of service detoriates then critical infrastructures such as IT companies,
telecommunication services will start to purchase power directly from generators which will
result in surplus of power accumulating in the hands of the appellant’s company.
Surplus power accumulation occurs when the power available with distribution
companies at a given time exceeds the demand for electricity. Power procurement by the
appellant’s company is done through long-term contracts with thermal power corporation. These
contracts legally bind the company into paying the thermal power corporation, lump sum
annually for fixed costs, and a per-unit charge to cover variable costs (mostly for fuel).
In such a case the appellant’s company has to pay the fixed charges even if they do not
draw power from the generating company for a particular time period. If such surplus cannot be
sold, it is backed down, which means power generators lie idle at that time, incurring fixed costs,
but generating no electricity. Hence to ensure quality service and to avoid surplus power
accumulation the cancellation of agreement must be done.
1.7. THE CANCELLATION OF AGREEMENT MUST BE DONE TO
MITIGATE THE LOSSES
The power purchase agreement entered by the appellant’s company with the thermal power
corporation has inflicted losses to them due to the high purchase power cost paid to the Thermal
27

Power Corporation. The appellant’s companies regulatory assets are building up, A&T losses are
increasing, debt burden of the company is rising as a result of losses incurred by the company.
In the case of Questar Builders, Inc. v. CB Flooring, it was held that “a contractor
may terminate a contract, in its discretion, only if it first determines that continuing with the
subcontract would subject it potentially to a meaningful financial loss or some other difficulty in
completing the project successfully”…10
Though there are no breaches in the agreement the agreement must be cancelled to
mitigate the losses as held in the case of Strategic Outsourcing, Inc. vs. Continental Casualty
Company, 2008, where the Court of Appeal for the Fourth Circuit stated that when a party loses
a substantial amount of money under the contract and the negotiation is impossible, then a
motive to terminate the contract is neither wrongful nor unconscionable. It further specifically
held that "a party's desire to avoid financial losses constitutes reasonable grounds for declining to
perform otherwise applicable contractual obligations."
Therefore, the act of the appellant is justified in seeking for the cancellation of the long term
power purchase agreement with Thermal Power Corporation.
AGREEMENT?
10
LLC, 978 A.2d 651, 675-76, 410 Md. 241, 281-82 (2009), ..
28

It is most humbly submitted before this Hon’ble Court that North Atlantic Edison Inc’s
approach through UK Government to seek relief against the Government of Indiana through
Bilateral Investment Promotion & Protection Treaty is correct and justified. North Atlantic
Edison Inc is entitled under the provisions of Bilateral Investment Promotion & Protection
Treaty to claim for arbitration.
2.1. OVERVIEW OF BIPA:
Bilateral investment Treaties (BITs) or Bilateral Investment Promotion and Protection
Agreements (BIPA’s) are established, “when two countries agree that managers can be of
any nationality, investment related transfers are allowed, assets are expropriated as with
international law, and access is to arbitration in disputes”.
They encourage foreign investors to invest in a State and there by contributing towards
overall developments and advancements of the economy11. It was in mid 90s that the BITs were
initiated by the Government of India. The pretext was to offer favourable conditions and treaty
based protection to the foreign investors and investments.
2.2.NORTH ATLANTIC EDISON INC COMES UNDER THE AMBIT OF BIPA:
Article 1 (a)12 of the Bilateral Investment Promotion And Protection Agreements between India
and UK provides as follows:
11
Union of India and AnrvsAzadiBachaoAndolan and Anr on 7 October 2003
29

DEFINITIONS:
For the purpose of this Agreement:
a) Companies means
i. In respect of the United Kingdom ; corporations, firms and associations
incorporated or constituted under the law in force in any part of the United
Kingdom or in any territory to which this Agreement is extended in
accordance with the provisions of Article 13;
ii. In respect of India; corporation, firms and associations incorporated or
constituted under the law in force in any part of India;
b) “investment” means every kind of asset established or acquired , including
changes in the form of such investment, in accordance with the national levels of
the Contracting Party in whose territory the investment is made and in particular,
though not exclusively, includes
i. Movable and immovable property as well as other rights such as
mortgages , liens or pledges;
12
BILATERAL INVESTMENT PROTECTION AND PROMOTION TREATY BETWEEN
INDIA AND UK
30

ii. Shares in and stock and debentures of a company and any other similar
forms of interest in a company.
iii. Rightful claims to money or to any performance under contract having a
financial value.
iv. Intellectual property rights, goodwill, technical processes and know-how
in accordance with the relevant laws of the respective contracting party;
v. Business concessions conferred by law or under contract, including
concessions to search for and extract oil and other minerals.
vi. “investors” means any national or company of a Contracting Party;
c) “investors” means any national or company of a Contracting Party
…………………………………………………………………….
………………..law of the sea.
2.2.1. COMPANY:
North Atlantic Edison Inc thus attains the status of a company according to 1(a)(ii) since
Delaware Electricity Board was a state run electricity distribution firm prior to privatization,
which shows that the same would have been constituted under the force of Indian law, and it was
taken over by North Atlantic Edison Inc under a competitive bidding .
2.2.2. INVESTMENT :
31

Investment includes every kind of asset established or acquired in accordance with the
national laws of the Contracting Party in whose territory the investment is made. Though not
exhaustively yet some forms of investments are provided;
 Movable and immovable property
 Shares in and stock and debentures of a company.
 Rightful claims to money or to any performance under contract having a financial value.
 Intellectual property rights, goodwill and technical processes.
Delaware Electricity Board is a board under Government of Delaware. Privatisation of the
distribution entity of the Delaware Electricity Board was done by transfer of 51 percent of shares
in the name of North Atlantic Edison Inc. Hence, from the above provisions it is clear that North
Atlantic Edison Inc. has an investment in the Host state i.e. Republic of Indiana which
consequently makes North Atlantic Edison Inc an investor too.
2.3. PROMOTION AND PROTECTION OF INVESTMENT:
Article 313 of BIPA provides that
1. Each contracting party shall encourage and create favourable conditions for investors of
the other to make investments in its territory, and admit such investments in accordance
with its law and policy.
BILATERAL INVESTMENT PROMTION AND PROTECTION OF TREATY BETWEEN

13
INDIA AND UK, 1995

32

2. Investments of investors of each Contracting Party shall at all times be accorded fair and
equitable treatment and shall enjoy full protection and security in the territory of the other
Contracting Party.
3. Each Contracting Party shall observe any obligation it may have entered into with regards
to investments of investors of the other Contracting Party, provided that the Dispute
resolution under Article 9 of this Agreement shall only be applicable to this paragraph in
the absence of a normal local judicial remedy being available.
Though in the present case there is no failure on compliance of contractual obligations, yet
there are unfavourable conditions which render it impossible for North Atlantic Edison Inc. to
continue with the power purchase agreement.
2.3.1. FAVOURABLE CONDITIONS:
Under the provisions of BIPA it becomes a duty of each Contracting State to create
favourable conditions for investors of other Contracting Party to make investments in its
territory. But such creation of favourable conditions doesn’t mean that only prior to investment
such conditions will prevail but the same would be present throughout the investment period of
the investors. The Republic of Indiana had accordingly created some favourable conditions prior
the investment was made by North Atlantic Edison Inc but after the acquisition of Delaware
Electricity Board by North Atlantic Edison Inc. those conditions were not provided by the
government of Indiana. Thought the power purchase cost was determined according to the
agreement between Thermal Power Corporation and North Atlantic Edison Inc., yet it was the
33

Government which made the private discom to comply with the various pacts its predecessor has
signed with several central and state government entities. This act of the Government has lead to
the creation of unfavourable conditions for North Atlantic Edison Inc’s business. Therefore, this
act of the government of Indiana had violated the aforesaid provision and the same made the
private discom an aggrieved party.
2.3.2. FAIR AND EQUITABLE TREATMENT:
Fair and Equitable Treatment, as Judge Rosalynn Higgins put it in the Oil Platforms
judgement14in the International Court of Justice, is a legal term of art well known in the field of
overseas investment protection.
According to the aforementioned clause investments of the Contracting Party shall at all
time be accorded with fair and equitable treatment and should be provided with full protection
and security in the territory of the other Contracting Party.
In the case concerning Elettronica Sicula Spa (ELSI) (United States of America v. Italy),
the Chamber of the International Court of Justice (I.C.J.), in its Judgement of 20 July 1989, held
that the requirement for constant protection and security, as expressed in the FCN treaty between
Italy and the United States, was not a warranty to a U.S. investor that no disturbance in any
14
[1996] ICJ Rep 847 [39]
34

circumstances would occur, and that the requisition by an Italian government entity of an
insolvent Italian company partially owned by the U.S. investor did not violate the requirement.
The Court also ruled that the requirement was to be measured by the “minimum international
standard” and that a sixteen month delay in a municipal judicial proceeding did not violate that
standard. However, a different approach was taken in a dissenting opinion by Judge Schwebel.
He reviewed the travaux préparatoires and preamble to the Supplementary Agreement and
deduced that one of the underlying principles of this Agreement and the Treaty it supplemented
was that “of equitable treatment”15. With this in mind, he concluded, inter alia, that a requisition
order issued by the Italian authorities against ELSI deprived the shareholders of their rights of
control, and constituted a violation of the principles of equitable treatment.
The fair and equitable treatment is a key element of international law on the protection of
investors and their investments. Though this term cannot be defined exhaustively and a minimum
standard for fair and equitable treatment has been followed currently. A 2007 study by
UNCTAD grouped the various formulations into seven categories16;
1. Treaties that grant investments fair and equitable treatment without making any reference to
international law or to any other criteria to determine the content of the standard17.
Elettronica Sicula S.P.A. (ELSI) (US. V. Italy), 1989, I.C.J. 15, reprinted in 28 International
15
Legal Materials 1109.
UNCTAD (2007), Bilateral Investment Treaties 1995‐2006: Trends in Investment Rulemaking,

16
p30‐33, http://www.unctad.org/en/docs/iteiia20065_en.pdf
17
E.g. Article II (2) of the 2001 BIT between Cambodia and Cuba (2001)
35

2. Treaties that state that investments will receive fair and equitable treatment no less favourable
than accorded to its own investors or to investors of any third State18.
3. Treaties that couple the fair and equitable treatment standard with an obligation to abstain
from impairing the investment through unreasonable or discriminatory measures19.
4. Treaties that require investments to be granted “fair and equitable treatment in accordance
with the principles of international law”20.
5. Treaties that similarly require fair and equitable treatment in accordance with the principles of
international law, but that in addition expressly
In the present case the first formulation can be applied since article 3(2) plainly provides
that the investors to the investment shall be accorded with fair and equitable treatment at all
times but the standard for such treatment and the principles under which the said treatment will
be accorded is not expressly mentioned. Though the minimum standard for such treatment is not
determined under this treaty it is very essential to know the standard because that knowledge in
turn helps to determine the way the Government of Indiana had treated North Atlantic Edison Inc
and whether that treatment was in fair and equitable manner.
Some principles are emerging from arbitral awards on the notion of legitimate expectations and
administrative decision making:

18
E.g. Article 4 of the 2001 BIT between Bangladesh and the Is
19
For example, Article 2(2) of the 2001 BIT between Hungary and Lebanon (2001)
20
E.g. Article 4(1) of the 1988 BIT between France and Mexico
36

 The State must ensure a stable business environment
Providing a stable legal and business environment has been identified in several decisions
as an essential element of fair and equitable treatment.21 Though what a State must do to meet
this requirement is not fully specified, it appears to include maintaining a transparent and
predictable framework for investors’ business planning and investment.55 Indeed, it has been
held that “fair and equitable treatment is inseparable from stability and predictability”.22
However, it has also been acknowledged that no investor can reasonably expect that the
circumstances prevailing at the time the investment is made to remain totally unchanged23.But
the Government of Indiana had not provided North Atlantic Edison Inc with a stable business
environment as the power purchase agreement saddled it with lot of burden and it depleted the
efficiency of its business and altogether it ruined the business environment with accumulation of
regulatory assets on one side and the reduction of their ability to give quality service on the other
side.
 Discrimination may sometimes be a breach :
Enron v. Argentina, para 260; Occidental v. Ecuador, para 183; CMS v. Argentina, paras 274‐
21
276; LG&E Energy Corp., LG&E Capital Corp. and LG&E International Inc. v. Argentine
Republic (ICSID Case No. ARB/02/1), Decision on Liability 3 October 2006, paras. 124, 125,
PSEG Global v. Turkey, para 253, Saluka v. Czech Republic, para 303.
22
CMS v Argentina, para 276.
23
Saluka v. Czech Republic, para 305; cited in PSEG Global v. Turkey, para 255.
37

Discriminating between nationals and foreign investors is not necessarily a breach of fair and
equitable treatment, unless the treaty explicitly prohibits discriminatory measures in the
standard.24 In Saluka v Czech Republic, the State was found to have failed to treat the investor’s
bank and a State-owned bank in an even-handed way because it granted the latter preferential
treatment25. In that case, the BIT’s provision on fair and equitable treatment expressly forbade
discriminatory measures. Similarly in the present case, the Government had failed to treat North
Atlantic Edison Inc and the State Owned firms in an even- handed way because it had granted
the latter preferential treatment26. Therefore, it is most humbly submitted before this Hon’ble
Court that the Government of Indiana had violated the provisions of fair and equitable treatment
and had created unfavourable conditions for pursuance of business by North Atlantic Edison Inc.
2.4. NATIONAL TREATMENT:
Article 4(1) of the Bilateral Investment Promotion and Protection Treaty between India
and UK states,“ Each Contracting Party shall accord to investments of investors of other
Contracting Party, including their operation, management, maintenance, use, enjoyment or
disposal by such investors, treatment which shall not be less favourable than that accorded either
to investments of its own investors or to investments of investors of any third State.”
Waste Management No. 2 v. Mexico, para 98, see McLachlan, Shore, Weiniger, para 7.108
24
p237
International Thunderbird Gaming v. Mexico, UNCITRAL (NAFTA), Final Award 26 January

25
2006, paras 163‐166,
CME v Czech para 611; SD Myers v. Canada, para 259; Petrobart v. Kyrgyz Republic, para 26.
26
77 ADF Group v. United States, para 178

38

Under national treatment, a state that grants particular rights, benefits or privileges to its
own citizens must also grant those advantages to the citizens of other states while they are in that
country. In the context of international agreements, a state must provide equal treatment to
citizens of the other states participating in the agreement. Imported and locally produced goods
should be treated equally — at least after the foreign goods have entered the market. Such an
undertaking by two or more contracting parties has been duly recognized by the United National
Conference on Trade and Development (‘UNCTAD’)27.7 In essence the clause means that the
host country is mandated to treat foreign products no less favourably than ‘like’ domestic
products.8 The underlying purpose of national treatment is to maintain competitive environment
between the domestic and the foreign investors ‘in like circumstances’.
There is discrimination by the Government of Indiana since it wanted to disadvantage
private discom by way of freezing tariff, though that was commonly for all the firms, it was a
loss for North Atlantic Edison Inc. since its power purchase cost had been increased threefold
which was due to the long term power purchase Agreement with Thermal Power Corporation
entered by its predecessor which was again the act of the Government which made North
Atlantic Edison Inc. comply with the agreement.
2.5. DISPUTE SETTLEMENT
Article 9 of the Bilateral Investment Treaty between India and UK provides that:
“SETTLEMENT OF DISPUTES BETWEEN INVESTOR AND HOST STATE:
27
39

1. Any dispute between an investor of one Contracting Party and the other Contracting
Party in relation to an investment of the former under this Agreement shall, as far as
possible , be settled amicably through negotiations between parties to the dispute.
2. Any such dispute which has not been amicably settled within a period of six months from
written notification of a claim may be submitted to international conciliation under the
Conciliation Rules of the United Nations Commission on International Trade Law, if the
parties to the dispute so agree.
3. Where the dispute is not referred to international conciliation, where it is so referred but
conciliation proceedings are terminated other than by signing of a settlement agreement,
the dispute may be referred to arbitration as follows:
a) If the Contracting party of the investor and the other contacting party are
both parties to the convention on the Settlement of Investment Disputes
between States and nationals of other States, 1965, and the investor
consents in writing to submit the dispute to the International Centre for the
Settlement of Investment Disputes such a dispute shall be referred to the
Centre: or
b) If both the parties to the dispute so agree under the Additional Facility for
the Administration of Conciliation, Arbitration and Fact-Finding
Proceedings; or
c) To an ad hoc arbitral tribunal by either party to the dispute in accordance
with the Arbitration Rules of the United Nations Commission on
40

International Trade Law, 1976. In respect of suc arbitral proceedings , the
following shall apply
i. The Arbitral Tribunal shall consist of three arbitrators. Each Party
shall select an arbitrator. These two Arbitrators shall appoint by
mutual Agreement a third Arbitrator, the chairman, who shall be a
national of a third State. The arbitrators shall be appointed within
two months from the date when one of the parties to the dispute
informs the other of its intention to submit the disputes to
arbitration within the period of the six months mentioned earlier in
paragraph (2) of this Article:
ii. If the necessary appointments are not made within the period
specified in sub-paragraph (b) (i), either party may, in the absence
of any other agreement, request the President of the International
Court of Justice to make the necessary appointments.
iii. The arbitral awards shall in accordance with the provisions of this
Agreement.
iv. The tribunal shall research its decision by a majority of votes;
v. The decision of the arbitral tribunal shall be final and binding and
the parties shall abide by and comply with the terms of its award
vi. The arbitral tribunal shall state the basis of its decision and give
reasons upon the request of either party;
41

vii. Each party concerned shall bear the cost of its own arbitrator and its
representation in the arbitral proceedings. The cost of the Chairman
is discharging his arbitral function and the remaining costs of the
tribunal shall be borne equally by the parties concerned. The
Tribunal may, however, in its decision direct that a higher
proportion of costs shall be borne by one of the two parties, and this
award shall be binding on both the parties.
Therefore , as per the procedure laid down by the aforesaid provisions when a dispute arises
between an investor and a host state then the following aspects must be undertaken to solve the
dispute;
 Amicable settlement of the dispute between the contracting parties28.
 Even after the period of 6 months the dispute is not settled amicably then
a written notification of a claim may be submitted to International
conciliation if the parties to the dispute agree.
 When the dispute is not referred to the international conciliation, or where
the conciliation proceedings are terminated then the dispute may be
referred to arbitration.
Maharashtra Power Development Corporation vsDabhol Power Co.And Ors. [2003] 117 Comp.
28
Cas 467
42

2.5.1. SETTLEMENT THROUGH NEGOTIATION;
The term ‘negotiation’ refers to the deliberation which takes place between the parties
touching a proposed agreement. The first and foremost procedural aspect in resolving the dispute
is the amicable settlement of the dispute through negotiation. In Dabhol Power Project, 1990 the
MSEB cancelled the power purchase contract of DPC which as consequence initiated arbitral
proceedings against MSEB invoking the provisions of India-Mauritius BIT. However, the cases
were ultimately settled and did not result in an international investment arbitration award29.
In the present case, there is no possible ways for negotiation since Thermal Power
Corporation is not ready for any kind of settlement because the Appellate Tribunal of Electricity
authorised the long term power purchase agreement and this implies that TPC would not be
ready for any kind of negotiation.
2.5.2. CONCILIATION UNDER UNITED NATIONS COMMISSION ON
INTENATIONAL TRADE LAW:
When the negotiation process fails or doesn’t get settled within a period of six months
then the next aspect is submitting a written claim of notification to international conciliation
under the conciliation rules of United Nations Commission on International Trade law. But this
is not a mandatory clause and the parties are at liberty to either choose it or leaving it behind. To
29
43

avoid unreasonable time delay North Atlantic Edison Inc. is seeking relief through Arbitral
proceedings
2.5.3. APPROACHING ARBITRAL TRIBUNAL:
Article 9(3) provides for the procedure to be adhered for approaching arbitration tribunal:
 If the parties to the dispute are parties to the convention on the Settlement of Investment
Disputes between States and nationals of other States, 1965, and the investor consents in
writing to submit the dispute to the International Centre for the Settlement of Investment
Disputes such a dispute shall be referred to the Centre.
But, Indiana is not a member of International Centre For the Settlement of Investment Disputes
and hence this clause cannot be applied. Moving to the next clause:
 If both the parties to the dispute so agree under the Additional Facility for the
Administration of Conciliation, Arbitration and Fact-Finding Proceedings; or
 To an ad hoc arbitral tribunal by either party to the dispute in accordance with the
Arbitration Rules of the United Nations Commission on International Trade Law, 1976.
“Ad hoc” means for this special purpose. An attorney ad hoc, or a guardian or curator ad
hoc, is one appointed for a special purpose, generally to represent the client or infant in the
particular action in which the appointment is made30.
30
Sallier v. Rosteet.108 La. 37S, 32 South.3S3; Bienvenu v. Insurance Co., 33 La. Ann. 212.
44

Accordingly North Atlantic Edison Inc. has approached the UK Government to seek
relief under Bilateral Investment Promotion and Protection Treaty.
Therefore it is most humbly submitted before this Hon’ble Supreme Court that the
Government of Indiana had violated the provisions of Bilateral Investment Promotion &
Protection Treaty and North Atlantic Edison Inc was aggrieved by the said act of the
Government of Indiana and has approached to arbitrational proceedings through the Government
of UK. Hence, the act of North Atlantic Edison Inc. approaching through UK government to seek
relief under Bilateral Agreement is justified.
It is most humbly submitted before this Hon’ble Supreme Court there is no other
alternative remedy available to the government of Delaware which will be more effective rather
than cancelling the long term power purchase agreement. This is because, long term power
purchase agreement entered between the Delaware Electricity Board and Thermal Power
Corporation has saddled both Delaware Electricity Board and the consumers of the State of
Delaware in terms of power purchase cost and billing respectively.
3.1. DIFFICULTIES ARISING OUT OF THE LONG TERM POWER PURCHASE
AGREEMENT :
45

Power Purchase Agreement Shall mean this Power Purchase Agreement including its
recitals and schedules, amended or modified from time to time in accordance with the terms
thereof. The long term power purchase agreement has encumbered North Atlantic Edison Inc
with numerous disadvantages and inefficiencies.
3.1.1. COST ON BUYING POWER:
The first and foremost disadvantage arising out of the long term power purchase
agreement is higher power purchase cost. Due to this agreement Delaware’s discom has to incur
60% more cost on buying power when compared with the other States. Due to higher power
purchasing cost, power thefts and bill collection inefficiencies in past years had raised the
aggregate technical and commercial – AT&C- losses to the private discom31. AT&C losses refer
to the difference between units input into the system and the units for which the payment is
collected. AT&C loss captures technical as well as commercial losses in the network and is a
true indicator of total losses in the system. AT&C Loss is the clearest measure of overall
efficiency of the distribution business as it measures technical as well as commercial losses.
Though the power discom has already lowered its AT&C Losses to less than 9% of the total
units of electricity supplied from about 53% at the start of operations but it is not sufficient for
them to safeguard themselves from high rising electricity purchasing cost. The only way
available here is to lower the power purchasing cost which requires the termination of the Power
Purchase Agreement.
3.1.2. ACCUMALATION OF REGULATORY ASSET:

31
Facts page 2
46

Regulatory assets include previously-incurred losses that are in the nature of deferred
expenditure and that can be recovered from consumers in future provided allowed by regulatory
authorities. Due to the increased power purchase cost North Atlantic Edison Inc. have regulatory
asset of nearly 15000Cr. As per an estimate, to liquidate these assets, the electricity prices in
Delaware would need to hike tariff by 10% every year for 5 years. This accumulation leads to the
financial distress of the discom which ultimately results in the reduced quality of service.
Reduction in quality of service means interrupted power supply and frequent power cuts. State of
Delaware is the capital city of Indiana. It is the centre of all industrial, technological, scientific,
socio-economic, and every dimension of activities. When there is disruption in power supply
then all of these activities will be disturbed which will result in huge amount of losses to the
consumers. Therefore continuing the power purchase agreement not only results in losses to
North Atlantic Edison Inc. rather to the whole of Delaware.
3.1.3. CONSUMERS WILL BE BILLED:
People use electricity for lighting, heating, cooling, and refrigeration and for operating
appliances, computers, electronics, machinery, and public transportation systems. Electricity is
one of the most basic needs of every human being. Due to the higher cost of power purchased
from Thermal Power Corporation the resulting losses will be ultimately billed to the consumers.
So, this will be saddling the customers with a burden of paying more than what they actually
47

consume. This in turn makes them deprived of the usage of electricity or they would be paying
more money to consumption for day to day needs which would be much less when the agreement
is scrapped down.
3.1.4. HEAVY LOSS TO NORTH ATLANTIC EDISON:
Due to the high power purchase cost North Atlantic Edison is meeting up with huge
amount of losses. Though the price fixing for the purchase of power is according to the
provisions of the power purchase agreement, the original parties to the agreement was not North
Atlantic Edison Inc and Thermal Power Corporation but it was Delaware Electricity Board and
Thermal Power Corporation. North Atlantic Edison Inc was made to comply with the agreement
which implies that the same was complied out of compulsion by the Private discom. So the act of
causing loss by the long term power purchase agreement to North Atlantic Edison Inc in which it
was not the actual party who had signed the agreement is not justifiable.
3.1.5. ALTERNATE REMEDIES AVAILABLE:
The alternative remedies available to the State Government in dealing with the situation
rather than cancelling the long term power purchase agreement are:
3.1.5.1. UJWAL DISCOM ASSURANCE YOJANA (UDAY):
48

UDAY Scheme was launched by Union Power Ministry for financial turn around and
revival package for state electricity distribution companies (DISCOMs). It aimed to help to make
discoms financially and operationally healthy so they can supply adequate power at affordable
rates.
This scheme is optional for the states to join. Under it, state governments were to take
over up to 75% of their respective discoms’ debt by issuing sovereign bonds to pay back the
lenders. Remaining 25% of debt will be issued by discoms in the form of bonds.
UDAY envisages to have a permanent solution for past as well as potential future issues
of power sector such as reducing interest burden on discoms by allowing states to take over the
bulk of their sector such as reducing interest burden on discoms by allowing states to take over
the bulk of their debt, reduce the cost of power, increase operational efficiencies of discoms by
providing capital and infrastructure like coal linkages and reduce in AT&C and transmission
losses. But this scheme is pertinent only to State owned Electricity Boards and not to private
entities. Therefore, North Atlantic Edison Inc. being a private discom cannot be availed with this
scheme.
3.1.5.2.RENOGOTIATION OF THE POWER PURCHASE AGREEMENT:
When the power purchase agreements are at the verge of termination, then renegotiation
presents itself as an efficient alternative remedy. The term ‘negotiation’ refers to, “formal
discussions between people who have different aims or intentions, especially in business or
politics, during which they try to reach an agreement.” Whereas the term, “renegotiation” refers
49

to discussing after the contract is made, terms and conditions in which both the parties are under
dispute.” The main dispute in the present case is that the price fixation by Thermal Power
Corporation for selling of power which is inflicting heavy burden on North Atlantic Edison Inc.
which in turn wants to terminate the power purchase agreement. So, the price issues shall be
renegotiated to avoid termination of the agreement. But, there is less chances on the part of
Thermal Power Corporation to agree to the terms of renegotiation. This is because, the Appellate
Tribunal of Electricity has validated the long term power purchase agreement which impliedly
show that the agreement is a signed and sealed document.
A similar instance to this remedy is Dabhol’s Case32, where DPC is building the world's
largest natural gas fired power plant on India's western coast. The 740 megawatt first phase of
the facility began operating in 1999. The plant's generating capacity will triple to 2,184 MW
when phase two is completed next month. MSEB agreed in 1995 to buy all the power produced
by the plant, but now says the power is too expensive, and is refusing to take the additional
second-phase capacity. Its change of mind has sparked concern over the fate of the project.DPC
has already issued a notice of arbitration, and last month its board authorised management to
terminate the contract. India has told US energy company Enron Corp that it should renegotiate
its contentious power purchase agreement with the Maharashtra state government. DPC will not
agree to changes in the PPA as it would feel that it is a signed and sealed document. A Dabhol
spokesman stated position that it is ready for a dialogue to resolve all issues, but a renegotiation
of the contract is not on offer.
32
Maharashtra Power Development Corporation vsDabhol Power Co.And Ors. [2003] 117 Comp. Cas 467
50

Similarly in the present case, Thermal Power Corporation would not be ready for a renegotiation
since the order of the Appellate Tribunal of Electricity validating the long term power purchase
agreement would make it as a sealed document.
3.1.5.2. REMOVAL OF TARIFF FREEZING:
Unlike a public electricity sector, a privatised electricity sector is exposed to market
forces and follows different rules. Where the main goal of public actors is to serve public needs
without regard to loss or profit, the private actors’ goal is profit maximisation. Owing to this
view and various other aspects the Central Government decided to disadvantage private discom
by freezing tariff. But North Atlantic Edison Inc. does not come under this view since its primary
aim is to provide quality service to the consumers and even though it has an increasing debt
burden it continues to provide with promised amount of electricity. But the price freezing cannot
be removed only for North Atlantic Edison Inc. Though tariff freezing removal will be one good
alternative to reduce the debt burden of North Atlantic Edison Inc. this is not possible because
general removal of the tariff freeze would result in various other disadvantages to general public
services. Therefore, this remedy cannot be effective for the present circumstance.
3.1.6. TERMINATION IS THE ONLY FEASIBLE OPTION:
All these alternative remedies clearly shows that they cannot be applied in the present
case since the circumstances under this case are more fierce and even though these remedies are
applied the results will not provide with efficient results when compared with the results of
terminating the power purchase agreement. Even when considering them to apply, these
51

remedies cannot be directly applied and they should be changed in accordance with the
circumstances of the present case, which would involve a lot of time period. But there is no time
available at leisure, to convert these remedies suitably and apply them since at present every unit
of power supplied to the consumers add to distributor’s debt burden. And reasonable delay
would worsen the situation to meets and bounds. Therefore, after ascertaining all the possible
alternative remedies, the termination of the long term power purchase agreement is the only best
possible way to reduce the losses of North Atlantic Edison Inc. and also to prevent the evil
consequences which would arise if the power purchase agreement is continued. The said
implications will not only affect North Atlantic Edison Inc. but all the consumers of various
backgrounds especially lower and middle classes of people. In general, these implications would
affect the entire State of Delaware, which depends on the electricity distributed from North
Atlantic Edison Inc.
Therefore, it is most humbly submitted before this Hon’ble Court that the Government of
Delaware does not have any best suitable alternative remedy and termination of the power
purchase agreement is the only possible solution available to the present case.
52

PRAYER FOR RELIEF
Wherefore, in the light of the issues raised, arguments advanced and authorities cited, may this
Hon’ble Court be pleased to:
1. Upheld the order of the Central Electricity Regulatory Commission and terminate
the long term power purchase agreement.
AND/OR
Pass any other order that it deems fit in the interest of Justice, Equity and Good
Conscience. And for this, the Petitioner as in duty bound, shall humbly pray.
53

COUNSELS FOR THE PETITIONER
54

Before The Honourable Supreme Court of Indiana

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101A

BEFORE THE HONOURABLE SUPREME

STATE OF DELAWARE AND NORTH ATLANTIC

THERMAL POWER CORPORATION (TPC)

TILA INTERNATIONAL MOOT COURT

COMPETITION ON ENERGY (TIMCEE) 2018

MEMORANDUM ON BEHALF OF THE PETITIONER

-DRAWN AND FILED BY THE COUNSEL FOR THE PETITIONER-

MEMORIAL ON BEHALF OF THE PETITIONER

B. INDEX OF AUTHORITIES ..............................6

C. STATEMENT OF JURISDICTION ..............................13

D. QUESTIONS PRESENTED ..............................14

E. STATEMENT OF FACTS .............................15

F. SUMMARY OF PLEADINGS .............................18

1. IS THE APPELLANT (STATE OF DELAWARE) JUSTIFIED IN SEEKING FOR THE

CANCELLATION OF THE LONG TERM PURCHASE AGREEMENT WITH

THERMAL POWER CORPORATION? .............................21

1.1 LONG TERM POWER PURCHASE AGREEMENT ………………….21

1.2. GOVERNMENT RIGHTS TO CANCEL AN LONG TERM POWER

PURCHASE AGREEMENT BASED ON PUBLIC GOOD …………………22

THE PUBLIC GOOD …………………22

BECOME ULTRAVIRES TO CONSTITUTION ………………….23

MEMORIAL ON BEHALF OF THE PETITIONER

1.4. THE LONG TERM POWER PURCHASE AGREEEMENT INCREASES

THE DEBT BURDEN OF THE APPELANTS COMPANY …………….25

1.5. THE QUALITY OF SERVICE PROVIDE WILL BE ENHANCED IF THE

1.6. SURPLUS AMOUNT OF POWER WILL ACCUMULATE IF THE

AGREEMENT IS NOT CANCELLED ……………27

1.7. THE CANCELLATION OF AGREEMENT MUST BE DONE TO

MITIGATE THE LOSSES ……………….28

2. WHETHER NORTH ATLANTIC EDISON INC IS CORRECT IN APPROACHING

THROUGH UK GOVERNMENT TO SEEK RELIEF UNDER BILATERAL

2.1. OVERVIEW OF BIPA ......................29

2.2.1. COMPANY ....................32

MEMORIAL ON BEHALF OF THE PETITIONER

2.3. PROMOTION AND PROTECTION OF INVESTMENT ….................33

2.3.1. FAVOURABLE CONDITIONS .....................33

2.3.2. FAIR AND EQUITABLE TREATMENT …..................35

2.4. NATIONAL TREATMENT …..................39

2.5. DISPUTE SETTLEMENT ......................40

2.5.1. SETTLEMENT THROUGH NEGOTIATION .....................43

2.5.2. CONCILIATION UNDER UNITED NATIONS COMMISSION ON

INTENATIONAL TRADE LAW .......................44

2.5.3. APPROACHING ARBITRAL TRIBUNAL .....................44

3. DO STATE GOVERNMENT HAVE ANY OTHER OPTION TO DEAL WITH THE

SITUATION RATHER THAN CANCELLING THE LONG TERM AGREEMENTS?

3.1. DIFFICULTIES ARISING OUT OF THE LONG TERM POWER PURCHASE

MEMORIAL ON BEHALF OF THE PETITIONER

3.1.2. ACCUMALATION OF REGULATORY ASSET ........................48

3.1.3. CONSUMERS WILL BE BILLED ............................49

3.1.4. HEAVY LOSS TO NORTH ATLANTIC EDISON ............................49

3.1.5. ALTERNATE REMEDIES AVAILABLE .............................50

3.1.5.1. UJWAL DISCOM ASSURANCE YOJANA (UDAY) .........................50

3.1.5.2. RENOGOTIATION OF THE POWER PURCHASE AGREEMENT …....................51

3.1.5.3. REMOVAL OF TARIFF FREEZING ...............................52

3.1.6. TERMINATION IS THE ONLY FEASIBLE OPTION ...........................53

H. PRAYER FOR RELIEF ..............................55

MEMORIAL ON BEHALF OF THE PETITIONER

S.NO STATUTES REFERRED YEAR PAGE NO

1. ELECTRICITY RULES 2003 ART 1

2. CONSTITUTION OF 1950 ART 14 &15

3. UNITED NATIONS 1976. ARBITRATION RULES