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Business News/ Industry / Telecom/  Vodafone says arbitration may be delayed
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Vodafone says arbitration may be delayed

Vodafone says two arbitrators of three-member panel have quit

Vodafone has been engaged in long-pending Rs20,000 crore tax dispute with the government. Photo: Hemant Mishra/MintPremium
Vodafone has been engaged in long-pending Rs20,000 crore tax dispute with the government. Photo: Hemant Mishra/Mint

New Delhi: Engaged in long-pending 20,000 crore tax dispute, Vodafone on Tuesday said there is likely to be a delay in the arbitration process as two arbitrators of the three-member panel have quit.

“The Indian government appointed an arbitrator but he resigned in May 2015. The third arbitrator, who will act as chairman of the tribunal, had been agreed by the two party-appointed arbitrators (prior to the government’s arbitrator’s resignation) but declined to accept the appointment... There is now likely to be a delay in appointing the chairman pending the Indian government appointing a replacement for its party-appointed arbitrator," Vodafone said in a statement.

While the government’s arbitrator, former chief justice of India R.C. Lahoti recused himself, neutral judge Abdulqawi Ahmed Yusuf of the International Court of Justice declined to be part of the three-member panel. Vodafone nominee Yves Fortier of Canada, however, continues to be on the panel.

The British telecom firm further said that if there is no subsequent agreement on appointment of the chairman, the International Court of Justice will appoint the third arbitrator. The dispute is over tax liability arising out of Vodafone’s 2007 purchase of Hutchison Whampoa Ltd’s Indian assets. Following an international arbitration notice by Vodafone, the previous United Progressive Alliance (UPA) government in May 2014 had approved the withdrawal of a conciliation offer. Earlier, the government had approved the conciliation with Vodafone in June 2013 in a bid to resolve the capital gains tax dispute.

While the basic tax demand was 7,990 crore, the total outstanding, including interest and penalty, is estimated to have risen to 20,000 crore. The Supreme Court had ruled in Vodafone’s favour in 2012, saying the company was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison. The government, however, amended the tax laws with retrospective effect to undo the Supreme Court judgement and claim taxes.

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Published: 19 May 2015, 11:39 PM IST
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