ET Telecom | 17 May 2017
Vodafone Group serves second notice on India to formally start 2nd arbitration in tax case
by Danish Khan
Vodafone Group Plc has served its second notice on the Indian government to formally commence the second arbitration in the high profile Rs 22,000 crore tax matter, following the Indian government’s failure to appoint a second arbitrator as required under the United Kingdom-India Bilateral Investment Treaty (UK BIT).
The Indian government had objected to Vodafone’s request that the President of the International Court of Justice appoint the second arbitrator to the tribunal, Vodafone Group Plc. said in its earnings release Tuesday. "The Indian government also indicated that it considers the arbitration under the UK BIT to be an abuse of process, however the claim has strongly been denied by Vodafone."
Vodafone Group Plc said it and its Dutch subsidiary VIHBV will continue to defend vigorously any allegation that VIHBV or VIL is liable to pay tax in connection with the transaction with HTIL and will continue to exercise all rights to seek redress including pursuant to the Dutch BIT and the UK BIT.
“We have not recorded a provision in respect of the retrospective provisions of the Income Tax Act 1961 (as amended by the Finance Act 2012) and any tax demands based upon such provisions,” according to the official statement.
The International Court of Justice in Hague had last year rejected the Indian government’s plea to replace the presiding arbitrator Sir Franklin Berman in the first arbitration, which left India in an embarrassing predicament of having to argue its case before the umpire Sir Berman, whom the govt had claimed was ineligible and in conflict of interest on account of his nationality, ET earlier reported.
Vodafone through its Dutch subsidiary VIHBV had on April 17, 2015, served a notice of arbitration under the
UBIT, formally commencing the Dutch BIT arbitration proceedings, following an amended trigger notice on the Indian Government under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’) on January 10, 2014.
In June 2016, the tribunal was fully constituted with Sir Franklin Berman KCMG QC appointed as presiding arbitrator. The Indian government however had raised objections to the application of the treaty to VIHBV’s claims and to the jurisdiction of the tribunal under the Dutch BIT.
"The tribunal is considering these jurisdictional objections and has indicated it will determine shortly whether to decide the Indian Government’s objections to jurisdiction as a preliminary question," Vodafone said.