Centre’s Reply Sought On Vodafone Plea On Jurisdiction Over International Arbitration

The Delhi High Court today sought the Centre's response on a plea by telecom major Vodafone challenging an order that the high court has jurisdiction to entertain a plea against the international arbitration initiated by the company against India in connection with a tax demand of Rs 11,000 crore.

A bench of Justices GS Sistani and Sangita Dhingra Sehgal issued notice to the Centre on a cross-objection filed by Vodafone in a pending appeal of the government against a single judge's May 7 order dismissing its plea against the international arbitration initiated by the company.

The bench listed Vodafone's plea and the Centre's appeal for hearing on Sept. 11.

Vodafone, represented through advocate Anuradha Dutt, sought to set aside the findings in the May 7 order to the extent that the high court has jurisdiction to entertain government's suit against international arbitration and against the company.

"Both the findings are unsustainable on facts and contrary to law," it said.

It claimed that the single judge had erred in holding that a 'domestic court' of the host state has jurisdiction to interdict remedies availed through invocation of a Bilateral Investment Protection Agreement (BIPA) arbitration.

In its appeal, the Centre has challenged the decision of the single judge permitting consolidation of two international arbitrations initiated by the company against India under the India-Netherlands and India-UK BIPA.

Vodafone had initiated the arbitration proceedings under the India-UK and India-Netherlands BIPA in connection with the tax demand raised against it in relation to its $11 billion deal to acquire the stake of Hutchison Telecom.

While proceedings under the India-Netherlands BIPA were pending, the telecom major initiated a second arbitration under India-UK BIPA as well on January last year.

The Centre had contended before the single judge that the Vodafone Group had abused the process of law by initiating two international arbitrations.

The single judge, while dismissing the Centre's plea, had given it liberty to raise the issue of  'abuse of process' before the consolidated India-UK BIPA tribunal. "In the present BIPA arbitration, a contractual obligation and a contractual right is involved and therefore, there is no bar as to the subject matter of the dispute or as to the jurisdiction of the court to hear the present case," the judgement had said.

The single judge had said it does not agree with the submission that the national court has no jurisdiction or should refrain from exercising its jurisdiction with regard to BIPA arbitrations.