HC rejects Centre's plea against Vodafone's UK arbitration

Last Updated: Tue, May 08, 2018 10:25 hrs
Man speaks on his mobile phone as he walks past the logos of Vodafone painted on a roadside wall in Kolkata

New Delhi: The Delhi High Court on Monday dismissed the Centre's plea challenging Vodafone's move to initiate two international arbitrations against India.

Vodafone has initiated the proceedings -- under India-United Kingdom Bilateral Investment Protection Agreement (BIPA) and India-Netherlands BIPA -- in connection with the tax demand raised against the company by the Indian government in relation to its $11-billion deal to acquire the stake of Hutchison Telecom.

The telecom major initiated arbitration under the India-UK BIPA while proceedings under the India-Netherlands BIPA were still pending.

The Centre had told the Delhi High Court that the Vodafone Group had abused the process of law by simultaneously initiating two international arbitrations.

"The present suit and application are dismissed," Justice Manmohan said while dismissing the Centre's plea.

However, the judge granted liberty to the Union of India to raise before the UK arbitration tribunal the issue of abuse of process under the India-United Kingdom BIPA, adding that the tribunal would decide this issue on its own merit, without being influenced by any observation made by this court.

The court observed that in recent years, there had been a rapid increase in bilateral investment treaty arbitrations, but there was limited authority on the jurisdiction and approach of national courts or on the nature of arbitrations under such treaties.

The court opined that it should apply the principle of kompetenz-kompetenz with full rigour as the India-United Kingdom BIPA arbitral tribunal would be better placed to assess the scope of the two BIPA arbitration proceedings and the likelihood of parallel proceedings and abuse of process.

The court also said that the plaintiff, Union of India, after having elected its remedy of agitating the issue of abuse of process before the Netherlands-India BIPA Tribunal could not have approached the national court on the same ground and, that too, without waiting for the award being rendered by the India-Netherlands BIPA tribunal.




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