Officials Raised Red Flags, but Modi & Doval Signed Rafale Anyway

The Law Ministry had objected to the draft, saying that it tilted the deal in favour of the French Government.

Despite warnings from officials in its own govt, PM Modi and NSA Doval went on ahead to sign the Rafale Deal with the French government, back in 2016.

(Photo: Canva/The Quint)

Despite warnings from officials in its own government and the law ministry, Prime Minister Narendra Modi went on ahead to sign the Rafale Deal with the French government, back in 2016, an investigation by The Caravan has found, just days after the Supreme Court expressed its satisfaction with the pricing details of the Rafale Deal and dismissed all requests for a probe into the matter.

The report also states, in detail, the significant role that National Security Advisor (NSA) Ajit Doval, had to play in the signing of the deal, although his name is nowhere mentioned in the list of people making up the Indian negotiating team, that was submitted to the court, in an affidavit by the centre, on 10 October.

In short, despite objections – “the Indian government went ahead to sign the financial, security or legally enforceable guarantee for delivery from either the French government or the jets’ manufacturer, Dassault Aviation,” the report added.

Loopholes in the Inter-Governmental Draft Agreement: Officials

There were a series of loopholes in the inter-governmental draft agreement concerning the Rafale Deal, that was presented before India’s Defence Acquisition Council, led by then Defence Minister Manohar Parrikar, and was discussed between 28 August and 1 September, 2015, the report stated.

On Being Held Accountable:

For starters, Article 4 of the draft agreement stated that French government was to transfer its “obligations” (of seeing the deal through) onto Dassault under an agreement they were calling the “convention”, which would perform the maneuver with MBDA, the missile supplier in the Rafale deal. As a result of which the French government could enter this “convention” with Dassault without making India a party to it.

This would mean that the Indian government would not be privy to any kind of information regarding its French counterpart’s actions to ensure that the deal was seen through.

This is problematic, as it gives leeway to the French government to “deny responsibility”, without leaving the Indian government an option to directly hold the former accountable, the report added. 

On Resolving Disputes:

Another problem as per the draft agreement concerning the deal, would be on the issue of resolving disputes. According to the draft, these disputes were to be settled under the rules of international arbitration, with the seat of arbitration being, Geneva.

In the case of a breach of contract, India, as per the draft, would be pursuing legal action against the supplier companies, instead of the French government, hence in the likelihood of a breach, India would first have to “exhaust all options for recovering the money from the supplier before bringing any claim to the French government,” the report claimed.

India being isolated from the “convention” between the French government and Dassault; and not being able to pursue legal action in the case of a breach of contract, against the French government, gives it the leeway to not be held accountable in any Indian court of law, the report added. 

Additionally, the draft also put unusual limits on the French government’s liability, in the case of any damages concerning the deal, and no provisions for any kind of a sovereign guarantee, which requires a security deposit from a sovereign government on behalf of a third party, which can be forfeited in case of a default – two points which are standard provisions in the case of all defence agreements.

The Law Ministry’s Objections to the Draft

When the draft was forwarded by the Defence Acquisition Council, to the Law Ministry for legal vetting, the latter came up with two separate responses: Note 228, that was dated 9 December, 2015 and Note 229, that was dated 11 December, the report stated.

While the earlier Note 228 claimed that the proposal for the “convention” would not entirely “absolve the French government of its obligations towards India”, and approved most of the provisions mentioned in the draft, it did, however, oppose the lack of one for a sovereign guarantee. Note 229, was a step up from this, objected to the provisions which allowed the French government to transfer its obligations to the supplier companies, and advised that the “Indian party should be a signatory or a confirming party with the Convention document”, the report stated.

If and only if the Indian government could not be made a party to the “convention”, then it should insist on a “joint and several liability” clause in both the inter-government agreement and the “convention.” Which only confirms that a third party will not influence the contract between the two main parties.

It also opposed the provision of putting a limit on French liability and called for a sovereign guarantee, the report added.

NSA Ajit Doval’s Role in the Rafale Deal

After the law commission put forth these two responses, they were forwarded to the Indian negotiating team, by the Defence Acquisition Council. The negotiating team, at this point, was led by the deputy chief of air staff, Rakesh Kumar Singh Bhadauria.

This is when the role of NSA Ajit Doval comes to the surface, the report claims. Citing Note 18, a retrospective document that was issued by the Defence Ministry in August of that year, the report claimed that:

“After the receipt of legal advice, discussions have taken place during the meetings of INT on these issues, in the meetings of MoD and also in the meeting of NSA and Member Secretary, INT, with the French side in Paris.”

The discussions took place on 12 and 13 January.

Despite the law commission’s advice for India to be included in the “convention” and if not that, then only settle for a joint and several liability clause in the inter-government agreement, the latter is what the French government agreed to. As a result, India was naturally left out of the contents of the convention, the report added. There was also no agreement from the French side to the provision for a sovereign guarantee or on the limit of liability to the French government.

Following this, a “joint document” of the draft inter-governmental agreement. was signed between the Indian and French negotiating teams. Citing Note 12, that was issued by the Defence Ministry on 22 August, 2015, the report stated that the joint document was signed in NSA Doval’s presence, which did not allow India a redress of the Law Ministry’s concerns.

Following this, the Indian negotiators chose to not take the matter up again, and instead placed it before the Cabinet Committee on Security for deliberation – on the advise of NSA Doval, the report, citing Note 18 again, claimed. The report further stated its observation that this would mean both Doval and Swaraj asked Parrikar, who was Defence Minister, to not press for a sovereign guarantee.

Despite all of the objections to the draft agreement that had been raised by government bodies and officials – which all said that the Indian government was coming worse-off in the deal – the committee, with Modi at the head, approved it in its existing form on 24 August, 2015, the report stated.

(With inputs from The Caravan)