Center Seeks Time On Appealing Against International Arbitration Award In Vodafone’s Favor

Vodafone had initiated the arbitration proceedings

The Center on Tuesday (November 17) sought time in the Delhi High Court to respond whether it would challenge an international arbitration tribunal’s award in favor of telecom major Vodafone under the India-Netherland Bilateral Investment Protection Agreement (BIPA) in connection with Rs 22,100 crore tax demand. A bench of justices Rajiv Sahai Endlaw and Asha Menon was informed by Additional Solicitor General (ASG) Chetan Sharma that the instructions are still awaited as the decision is to be taken by the empowered committee of the central government, which has not met.

The ASG’s reply came on the court’s query raised on October 7 as to whether it intends to abide by the international arbitration tribunal’s decision or will challenge it further. Senior advocate Harish Salve, representing Vodafone, said there was no reason left for the continuation of the present injunction proceedings.

He submitted that Vodafone shall not proceed with the second international arbitration under the India-UK BIPA, commenced in Singapore, until the award was published under the India-Netherland BIPA, if at all, is set aside. The bench, in its order, said, “We are of the view that in view of the said statement of vodafone, the appeal can be disposed of.”

The ASG sought two weeks time to consider this and the court listed the matter for further hearing on December 8. In September, an international arbitration court has ruled that the Indian government seeking Rs 22,100 crore in taxes from Vodafone using retrospective legislation was in “breach of the guarantee of fair and equitable treatment “guaranteed under the bilateral investment protection pact between India and the Netherlands.

The high court was hearing center’s plea against the international arbitration the company has initiated against India under the India-UK Bilateral Investment Protection Agreement (BIPA) in connection with a tax demand. The central government has appealed against a single judgment order of May 7, 2018 dismissing its plea against the international arbitration initiated by Vodafone.

The division bench had in May 2018 issued notice to Vodafone and sought its reply to the government’s appeal. The center has challenged the decision of the single judge permitting consolidation of two international arbitrations initiated by the company against India under the India-Netherlands and India-UK BIPA.

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Vodafone had initiated the arbitration negotiations under the India-UK and India-Netherlands BIPA in connection with the tax demand raised against it in relation to its USD 11 billion deal to acquire the stake of Hutchison Telecom.

While negotiations under the India-Netherlands BIPA were pending, the telecom major initiated a second arbitration under India-UK BIPA as well on January 24, 2017. The center had contended before the single judge that the Vodafone Group had abused the process of law by initiating two international arbitrations.

The single judge, while dismissing the center’s plea, had given it liberty to raise the issue of “abuse of process” before the consolidated India-UK BIPA tribunal.

He had said the center was a party to the BIPA, a treaty between two sovereign governments (of the United Kingdom and India). The obligations under such treaties were not subject to domestic laws and disputes arising out of them were not subject to the jurisdiction of the national courts, the judge had observed.

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