Weekly Update: Investment Arbitration, BRICS, WTO, Tulbul and More….

Here are some of the major international legal developments of relevance to India and South Asia for the week ending 31 March 2012:

Investment Arbitration

  • Vodafone may file a claim against India under the India-Netherlands BIT for the capital gains tax sought to be retrospectively imposed by India against it: Indian Express, Independent, DNA, Wall Street Journal (paywalled).
  • Norwegian telecom operator Telenor, faced with the prospect of its Indian joint venture losing 22 2G mobile licences due to the Supreme Court judgment in the 2G case, has filed a notice of dispute  against India under the India-Singapore BIT seeking damages to the tune of USD 14 billion: Economic Times. [With a notice of dispute already filed by the Russian company Sistema against India, this makes it two investment treaty disputes arising out of the Supreme Court’s 2G judgment]

WTO Disputes

  • India is preparing to file a dispute against the US at the WTO over the visa fee charged by the latter for Indian software companies. The claim: “discrimination” against the Indian software companies which are being asked to pay higher H1B and L1 visa fee for their employees than the American firms for bringing more number of skilled immigrants to their country at lesser costs:  Economic Times.
  • The US called upon India to accede to the government procurement agreement — a plurilateral WTO agreement.
  • The US and EU have come out against the local content requirements in India’s Jawaharlal Nehru Solar Mission, which requires requires solar mission investors to use Indian manufactured solar modules and source 30 percent of their inputs from India: Hindustan Times. The Indian government is already reported to be preparing its strategy in case a dispute is filed at the WTO.

International River Water Disputes

EU Emissions Scheme

  • The Indian government has confirmed that it will be directing Indian airlines not to participate in the EU’s controversial aviation emissions rule. (Recall that China has already boycotted the EU scheme, as well): ICTSD.

India-Pakistan Trade

UN Special Rapporteur on AFSPA in Kashmir

  • After a visit to Kashmir, rhe UN Special Rapporteur on extrajudicial, summary or arbitrary executions stated that the Indian Armed Forces (Special Powers) Act has become a symbol of “excessive state power” and has “no role to play in a democracy”: NDTV, Hindustan Times. The official press release can be found here.

BRICS

  • The past week saw the leaders from Brazil, Russia, India, China and South Africa assemble in Delhi for the fourth BRICS Summit. The theme of the summit was “BRICS Partnership for Global Stability, Security and Prosperity”.
  • The countries were called upon to support a common developing country candidate as the successor of DG Lamy.
  • In addition, the heads of state of the BRICS countries signed two agreements supporting trade in local currencies between them. The two agreements are: (i) the Master Agreement on Extending Credit Facility in Local Currencies; and, (ii) the BRICS Multilateral Letter of Credit Confirmation Facility Agreement. More details can be found in a MEA document here.
  • In culmination of the summit, the BRICS countries issued the “Delhi Declaration“. Here are some excerpts from the Declaration:
  • On the Doha Round at the WTO:

16. We will continue our efforts for the successful conclusion of the Doha Round, based on the progress made and in keeping with its mandate. Towards this end, we will explore outcomes in specific areas where progress is possible while preserving the centrality of development and within the overall framework of the single undertaking. We do not support plurilateral initiatives that go against the fundamental principles of transparency, inclusiveness and multilateralism. We believe that such initiatives not only distract members from striving for a collective outcome but also fail to address the development deficit inherited from previous negotiating rounds. Once the ratification process is completed, Russia intends to participate in an active and constructive manner for a balanced outcome of the Doha Round that will help strengthen and develop the multilateral trade system.

  • On Syria:

21. We express our deep concern at the current situation in Syria and call for an immediate end to all violence and violations of human rights in that country. Global interests would best be served by dealing with the crisis through peaceful means that encourage broad national dialogues that reflect the legitimate aspirations of all sections of Syrian society and respect Syrian independence, territorial integrity and sovereignty. Our objective is to facilitate a Syrian-led inclusive political process, and we welcome the joint efforts of the United Nations and the Arab League to this end. We encourage the Syrian government and all sections of Syrian society to demonstrate the political will to initiate such a process, which alone can create a new environment for peace. We welcome the appointment of Mr. Kofi Annan as the Joint Special Envoy on the Syrian crisis and the progress made so far, and support him in continuing to play a constructive role in bringing about the political resolution of the crisis.

  • On Iran:

22. The situation concerning Iran cannot be allowed to escalate into conflict, the disastrous consequences of which will be in no one’s interest. Iran has a crucial role to play for the peaceful development and prosperity of a region of high political and economic relevance, and we look to it to play its part as a responsible member of the global community. We are concerned about the situation that is emerging around Iran’s nuclear issue. We recognize Iran’s right to peaceful uses of nuclear energy consistent with its international obligations, and support resolution of the issues involved through political and diplomatic means and dialogue between the parties concerned, including between the IAEA and Iran and in accordance with the provisions of the relevant UN Security Council Resolutions.

Advertisements

Repercussions of the 2G Judgment: A BIT Claim Against India?

Reacting to the Indian Supreme Court’s judgment in the 2G spectrum case, Sistema, a Russian company, has invoked its right under Article 9.1 of the bilateral investment treaty between the government of the Russian Federation and the Government of India by filing a notice of dispute against India. Sistema has a joint venture with India’s Shyam Group — SistemaShyam Teleservices , in which the Russian government also has a stake of 17.14%. (see reports in the Economic Times and LiveMint)

This is the official explanation from the Sistema website:

[Sistema] has today sent a formal notice to The Republic of India notifying it of a dispute under the Bilateral Investment Treaty (BIT) between the Government of the Russian Federation and the Government of the Republic of India arising from the decision of the Supreme Court of India issued on February 2, 2012 regarding the cancellation of 122 telecom licenses, including 21 licenses belonging to Sistema Shyam TeleServices Ltd (“SSTL”), in which Sistema owns a 56.68% share. Sistema believes that the cancellation of SSTL’s licenses following Sistema’s investment of billions of dollars into the Indian cellular sector is contrary to India’s obligations under the BIT, including obligations to provide investments with full protection and security and obligations not to expropriate investments.

The formal notice requests The Republic of India to settle the dispute relating to the revocation of SSTL’s 21 telecom licenses in an amicable way within six months.  If the dispute is not amicably resolved by August 28, 2012 Sistema reserves the right to commence proceedings against The Republic of India as provided in the BIT.

Hat-tip to Luke of IA Reporter.