Delhi High Court refuses to stop Vodafone’s UK arbitration
MUMBAI, MAY 7
The Delhi High Court has refused to stop the arbitration filed by Vodafone Plc in the UK against the ₹22,000-crore tax claim by the Indian tax department.
The court said that the Centre can approach the UK arbitration tribunal under the India-United Kingdom Bilateral Investment Protection Agreement if it has any grievance on the issue. According to legal experts, the verdict upholds the legitimacy of bilateral investment treaties when it comes to protecting a foreign investor.
Vodafone had invoked the India-Netherlands Bilateral Investment Protection Agreement in 2014. It also invoked arbitration under the India-UK BIPA on January 24, 2017.
The Centre had argued against the second arbitration stating that both arbitrations were related to the same issue and Vodafone was in effect ‘treaty shopping’. Vodafone has questioned the tax department’s decision to claim tax retrospectively for a deal with Hutchison in 2007. It has argued that it was entitled to seek protection under both the bilateral investment treaties.
The Centre had imposed a tax liability on Vodafone to the tune of ₹11,000 crore but this was set aside by the Supreme Court in 2102. The government then amended the IT laws retrospectively and reinstated the tax liability with interest and penalties, which took the total liability to ₹22,000 crore.
