Industry Ministry wants review of BIPA
Worried over a spurt in cases of overseas telecom companies, including Vodafone, seeking protection under BIPA, the Industry Ministry has made a case for re-negotiation of such bilateral investment protection agreements with foreign countries.
"This is a serious issue and concern (that telecom companies are filing cases against India under bilateral investment protection agreements (BIPA). There is a need to re-negotiate these pacts to deal with such situations," an official in the Ministry of Commerce and Industry said.
Several global telecom firms, which had lost their 2G licences following a Supreme Court judgement, have slapped notices on the government citing breach of bilateral investment protection pacts.
The objective of BIPAs is to promote and protect the interests of investors of either country in the territory of other nation.
Such agreements increase the comfort level of the investors by assuring a minimum standard of treatment in all matters and provides for justifiability of disputes with the host country.
India has so far signed BIPAs with 82 countries out of which 72 including that of with Russia, Germany, UK and Netherlands have already come into force and the remaining agreements are in the process of being enforced.
Besides Sistema and Telenor, Mauritius-based investors in Loop Telecom have slapped notices on the government under bilateral investment protection treaties, after Supreme Court cancelled their telecom licences.
While these investors in Indian telecom companies were aggrieved about cancellation of their licences by the Supreme Court, Vodafone sent a separate notice to the government against amending the Income Tax Act with retrospective effect.
The retrospective amendment, which has already been approved by the Lok Sabha, would undo the victory achieved by Vodafone in the tax case pertaining to its acquisition of Hutchison in Hutchison Essar in a USD 11.2 billion deal in 2007.
According to Finance Ministry sources, the provision of the BIPA between India and the Netherlands, under which the notice was served, might not apply hold in the Vodafone case as it deals with tax issue. Moreover, the deal was signed in Cayman Islands.
However Ficci President R.V. Kanoria said that "any law should be implemented prospectively and not retrospectively. And investments must be protected".
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