New Delhi: The Centre on Monday told the Delhi high court that Vodafone Group Plc’s move to invoke a second arbitration under India-UK Bilateral Investment Protection Agreement (BIPA) was a textbook example of ‘treaty-shopping’.
Appearing for the central government, additional solicitor general Sanjay Jain argued that the second arbitration was invoked to‘circumvent the outcome’ of the first arbitration under India-Netherlands BIPA which allegedly has certain jurisdictional defects that could go against Vodafone Group Plc."
It further argued that allowing multiple arbitrations for the same claim under different investment treaties would have ‘immediate opportunity costs’ as Republic of India would be made to spend its ‘sparse resources’ in defending similar claims at different forums.
“This is antithetical to intention of the (signatory) States and principle of good faith under the Vienna Convention", Jain said.
“(If the second arbitration is allowed) There is no guarantee a third arbitration under another BIPA, say, India-Mauritius BIPA would not be invoked", he further submitted.
Centre also rejected Vodafone Group Plc’s solution of consolidating the two arbitration proceedings as it would ‘not be a seamless merger’. Jain argued that not only were the two BIPAs substantially different, the two arbitrations were at different stages of proceedings. While the second arbitration under India-UK BIPA is at ‘ground zero’, the first arbitration is at a much advanced stage.
In August, 2017 the Centre had moved the Delhi high court seeking an anti-arbitration injunction against Vodafone Group Plc when the latter had invoked arbitration under the India-UK BIPA, while arbitration proceedings were already going on under the India-Netherlands BIPA. Both the arbitrations have the same subject matter, i.e. the application of retrospective amendment to the Income Tax Act which imposed a Rs11,000 crore liability on Vodafone in relation to its $11 billion deal in 2007 acquiring the stake in Hutchinson Telecom, in 2012.