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Vodafone moves ICJ to appoint arbitrator

30 Mar 2016

UK-based Vodafone Group has moved the International Court of Justice (ICJ) seeking the appointment of a third arbitrator to settle its INR200 billion (USD3.0 billion) tax dispute with the Indian government, the Economic Times writes. The arbitrators selected by Vodafone and India could not reach an agreement on the selection of the final judge on the three-member panel, prompting the British group to move the ICJ to intervene. The dispute relates to claims that Vodafone owes the state INR200 billion in relation to its USD11 billion acquisition of Hutchison Whampoa’s stake in Vodafone India in 2007. The Supreme Court ruled in favour of Vodafone in January 2012 but in May that year the government introduced new legislation that would allow it to tax the company retrospectively.

The two parties have agreed to arbitration, although the process of selecting arbitrators has been drawn-out, and the matter has been complicated by New Delhi’s erratic approach. On the one hand, Finance Minister Arun Jaitley offered to waive the interest and penalties on the fees the government claims are owed, more than halving the amount payable by Vodafone from INR200 billion to INR80 billion. On the other hand, in February this year the tax office issued Vodafone a fresh demand for INR142 billion, threatening to seize the company’s assets if it fails to make the payment.

India, Vodafone Group, Vodafone India

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