In response to Vodafone filing a notice of dispute against India under the India-Netherlands BIT, here is India’s initial response as per a news report:
Referring to the recent threat of Vodafone to invoke bilateral investment treaty with the Netherlands on the tax issue, the official said the arbitration clause in the BIPA (Bilateral Investment Protection Agreement) cannot apply in Vodafone-Hutchison deal as it was signed in Cayman islands.
“The deal happened in Cayman islands and they are invoking India-Netherlands BIPA,” the finance ministry official said, adding “while in the Supreme Court Vodafone said that the deal happened outside India, under BIPA it is saying it has made substantial investment in India.”
Under the BIT, an “investment” for the purposes of jurisdiction of the arbitral tribunal exists if there an “asset invested in accordance with the national laws and regulations of the Contracting Party in the territory of which the investment is made….” Article 1(a) also provides the usual inclusive listing of what constitutes “investment” for the purposes of the BIT.
[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.