SG recommends govt challenge Vodafone arbitration result

India’s Solicitor General Tushar Mehta has advised the government to challenge Vodafone Group’s recent arbitration award, the Economic Times writes. The arbitration covered Delhi’s prolonged attempts to impose an INR221 billion (USD3.0 billion) tax demand on the British group in relation to its acquisition of a controlling stake in Indian cellco Hutchison Essar in 2007. As noted by TeleGeography’s GlobalComms Database, the Supreme Court ruled against the government in January 2012 but in May that year the government introduced new legislation that allowed tax demands to be applied retrospectively. Following this, Vodafone sought international arbitration on the matter and last month an international arbitration tribunal ruled in the company’s favour, agreeing with Vodafone that the tax department had breached the terms of a bilateral investment treaty between India and the Netherlands. In recommending that the government continue to pursue the decade-long case, Mr Mehta argued that the arbitration court lacked the authority to overturn legislation, stating: ‘The question of law – the power of an arbitral tribunal to virtually and substantially declare a parliamentary legislation of a competent Parliament of a sovereign nation to be non est and unenforceable – itself is an issue which needs to be challenged.’