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Lessons From India: A Wake-Up Call ?

Posted on September 29, 2014 at 12:35 PM

Something very interesting just happened in India.


The Supreme Court cancelled almost all - 214 out of 218 - coal mining licences awarded by the government between 1993 and 2010 after finding they had been awarded illegally. (The four units allowed to continue are linked to major state power projects.)


You can just hear the businessmen expostulate.


The Financial Times  quoted analysts at Macquarie saying companies that had begun mining under the now-cancelled licences faced fines of some $1.2bn, and share prices took a hit.


It was a slap in the face for the Indian government, which had argued that operational mines should remain with their owners, with fines as appropriate punishment. Perhaps the Supreme Court was watchful of the negligible effect fines appear to be having globally on behaviour in other industries?


It found that the application process for the licences was illegal and unconstitutional due to “arbitrariness, lack of transparency” and “lack of objectivity.” Greenpeace, which has been engaged with local campaigners in the state of Madhya Pradesh to protect the forests of Mahan, was jubilant.


Essar, on the other hand, Hindalco, Adani and others have not come out well. 


“This is a wake-up call for the Modi government. They came to power on an anti-corruption and economic growth agenda, but coal is too mired in corruption to meet their goal of delivering access to electricity to all and economic growth across the country. Today’s landmark ruling is a strong message from the highest court in the country to the government and industry that the laws of the land cannot be circumvented and disregarded”  (my emphasis) said Vinuta Gopal, climate and energy campaigner of Greenpeace India.

Mahan Image - Greenpeace 


There are ramifications outside India. Companies such as UK-listed FTSE 100 Vedanta Resources  will now have to rebid for mining licences that they had previously acquired, but which had not yet begun operations.


So anyone with an interest in corporate governance – and the rising tide of support for issues of environmental, social and governance (ESG) concerns and sustainability, should be watching with great care.


We rely on three arms for effective rule of law – the legislative (which makes and develops the law), the executive (which carries it out and enforces it) and the judiciary (which interprets it and gives effect to it) – as highlighted again recently by Lord Neuberger in a different context in a speech at the Hong Kong Foreign Correspondent’s Club.


But what happens when the three become ‘out of sync’? And is that what we have just seen in this Indian Supreme Court decision: the judiciary appears more closely aligned to the ‘concerns of the people’ than the executive or the legislature on this occasion.


India is India.....so who can say what will happen next in this context. It may be a 'one-off' ruling. But it remains of interest.


In his book  A Theory of Justice, John Rawls explored the idea of a ‘veil of ignorance’ that deprived all parties of particular knowledge in order to come to the fairest decision for all.


By placing all of us in the same predicament of an uncertain future, the current wave of concern for a sustainable  planet may yet require a similar ‘veil of ignorance’ for game-changing decisions for the future.

Categories: Accountability, Scrutiny, Engagement