沃达丰仲裁事件:给印度的教训
海牙常设仲裁法院(PCA)最近裁定，印度违反了印度和荷兰签订的双边投资条约(BIT)规定的义务，试图向沃达丰索赔22亿美元的税务责任，尽管最高法院在2012年的一项判决宣布，印度税务机关没有征税的管辖权。
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The Permanent Court of Arbitration (PCA<\/strong>) at the Hague has recently ruled that India acted in breach of its obligations under the bilateral investment treaty (BIT<\/strong>) entered into between India and the Netherlands by seeking to claim an $2.2 billion tax liability from Vodafone despite a Supreme Court judgment in 2012 that had declared that the Indian tax authorities had no jurisdiction to impose the tax. The ruling of the PCA finds that India was in breach of its fair and equitable treatment obligation under the BIT and accordingly, directs the Indian government to \u201ccease the conduct in question<\/em>\u201d i.e. . The PCA also directs the Indian government to reimburse 60% of Vodafone\u2019s legal costs and certain sums towards costs paid towards the arbitration process.
<\/p>
The Permanent Court of Arbitration (PCA<\/strong>) at the Hague has recently ruled that India acted in breach of its obligations under the bilateral investment treaty (BIT<\/strong>) entered into between India and the Netherlands by seeking to claim an $2.2 billion tax liability from Vodafone despite a Supreme Court judgment in 2012 that had declared that the Indian tax authorities had no jurisdiction to impose the tax. The ruling of the PCA finds that India was in breach of its fair and equitable treatment obligation under the BIT and accordingly, directs the Indian government to \u201ccease the conduct in question<\/em>\u201d i.e. . The PCA also directs the Indian government to reimburse 60% of Vodafone\u2019s legal costs and certain sums towards costs paid towards the arbitration process.<\/p>
The dispute goes back to 2007 when Vodafone acquired Hutch\u2019s business in India. The deal was structured in such a manner that Vodafone\u2019s Netherlands entity acquired the 67% shareholding held by a Cayman Island company (Hutchison Telecommunications), in the Indian company, Hutchison Essar. Subsequently, the Indian tax authorities slapped a capital gains tax demand on Vodafone. Vodafone argued that it was not liable to pay the tax as there was no transfer of any capital asset in India. The Indian tax authorities argued that the deal was cleverly structure to avoid tax liability. The matter went up to the Bombay High Court which upheld the claim by the Indian tax authorities and ultimately to the Supreme Court which reversed the Bombay High Court\u2019s decision and held that the Indian tax authorities had no jurisdiction to impose tax on this transaction. The Supreme Court observed that unless a transaction was a complete sham and the sole purpose was avoidance of tax liability, companies are allowed to structure their deals in the most efficient manner within the existing legal framework.
<\/p>
Following the Supreme Court judgment, in 2012, the Indian government retrospectively amended its tax laws and reinstated the demand on Vodafone. This led Vodafone to invoke arbitration under the India-Netherlands BIT. These actions occurred during the rule of the UPA government in India. What is surprising is that even after the NDA led government came into power in 2014 with its promises of \u2018minimum government, maximum governance\u2019 and improving \u2018ease of doing business\u2019, while it criticised the retrospective tax law amendments, it did nothing to change the situation.
<\/p>
In 2017, Vodafone invoked a second arbitration proceeding relying on the India-UK BIT. The Indian government moved to challenge the second arbitration proceeding by filing for an anti-arbitration injunction before the Delhi High Court. This petition ultimately came to be dismissed as Vodafone undertook to consolidate the arbitrations under the India-Netherlands BIT and India-UK BIT.
<\/p>
History has shown that amendments to laws to specifically by-pass Supreme Court rulings have not been successful and are at best an attempt by the legislature to assert superiority over the judiciary. In the present case, the fact that the amendment also was targeted at a particular foreign investor sends out a wrong signal to foreign investors looking to invest in India. At a time when the economy is facing a downward trend and the current government\u2019s endeavour is to ensure ease of doing business in India, the government would do well to avoid such misadventures in the future. Media reports suggest that the Indian government may consider appealing the decision. Any future course of action would have to be carefully decided keeping in mind the overall policy of the government and the current state of affairs.
<\/p>
This decision of the PCA is also likely to have significance for other pending arbitrations between the Indian government and other foreign companies such as Cairn Energy and Nokia. Amongst others, in the Vodafone matter, the Indian government had argued that the BIT does not cover tax related issues and therefore, the PCA has no jurisdiction to adjudicate on this dispute. This argument has been rejected by the PCA. As a result, we may also see more foreign companies invoking BIT arbitrations to adjudicate their tax disputes.<\/p>","blog_img":"","posted_date":"2020-11-09 15:29:01","modified_date":"2020-11-09 15:29:01","featured":"0","status":"Y","seo_title":"Vodafone arbitration saga: Lessons for India","seo_url":"vodafone-arbitration-saga-lessons-for-india","url":"\/\/www.iser-br.com\/tele-talk\/vodafone-arbitration-saga-lessons-for-india\/4617","url_seo":"vodafone-arbitration-saga-lessons-for-india"}">
常设仲裁法庭(主成分分析)最近裁定，印度的行为违反了双边投资条约规定的义务(位)在印度和荷兰之间展开了一场斗争，试图向印度和荷兰索赔22亿美元的税务责任沃达丰(Vodafone)尽管2012年最高法院的一项判决宣布，印度税务当局没有征收这种税的管辖权。常设仲裁法院裁定，印度违反了《双边投资协定》规定的公平和公平待遇义务，因此，指示印度政府“停止有关行为即。常设仲裁法院还指示印度政府偿还沃达丰60%的法律费用，以及在仲裁过程中支付的某些费用。
这一争端可以追溯到2007年，当时沃达丰收购了和记黄埔在印度的业务。这笔交易的结构是这样的:沃达丰的荷兰实体收购了一家开曼群岛公司(和记电讯)在印度公司Hutchison Essar所持有的67%的股权。随后，印度税务当局对沃达丰征收资本利得税。沃达丰辩称，它没有义务缴纳税款，因为没有任何资本资产转移到印度。印度税务当局认为，这笔交易是巧妙的结构，以避免纳税义务。这件事被上诉到孟买高等法院，支持印度税务当局的主张，最终上诉到最高法院，推翻了孟买高等法院的决定，认为印度税务当局没有对这笔交易征税的管辖权。最高法院指出，除非交易完全是骗局，而且唯一目的是逃避纳税责任，否则公司可以在现有法律框架内以最有效的方式构建交易。
2012年，在最高法院做出判决后，印度政府对其税法进行了回顾性修订，并恢复了对沃达丰的要求。这导致沃达丰根据印度-荷兰投资协定提起仲裁。这些行为发生在印度团结进步联盟政府统治期间。令人惊讶的是，即使在2014年全国民主联盟领导的政府上台后，承诺“最小政府，最大治理”和改善“营商环境”，尽管它批评了具有追溯力的税法修正案，但它没有改变这种情况。
2017年，沃达丰援引了依赖于印度-英国BIT的第二次仲裁程序。印度政府向德里高等法院申请了反仲裁禁令，对第二次仲裁程序提出了质疑。这一请愿最终被驳回，因为沃达丰承诺根据印度-荷兰BIT和印度-英国BIT合并仲裁。
历史表明，专门绕过最高法院裁决的法律修正案并不成功，充其量是立法机关企图凌驾于司法机关之上的一种企图。在目前的情况下，修正案还针对特定的外国投资者，这一事实向希望在印度投资的外国投资者发出了错误的信号。在印度经济面临下行趋势，现任政府努力确保在印度做生意的便利之际，政府在未来避免此类不幸事件会做得很好。媒体报道称，印度政府可能会考虑上诉。今后的任何行动方针都必须在考虑政府的总体政策和当前局势的情况下谨慎决定。
常设仲裁法院的这一裁决，也可能对印度政府与凯恩能源(Cairn Energy)和诺基亚(Nokia)等外国公司之间的其他未决仲裁产生重大影响。其中，在沃达丰事件中，印度政府辩称，BIT不包括与税收相关的问题，因此，PCA没有管辖权裁决这一争端。这一论点已被常设仲裁法院驳回。因此，我们可能还会看到更多外国公司援引BIT仲裁来裁决他们的税务纠纷。
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<\/p>
The dispute goes back to 2007 when Vodafone acquired Hutch\u2019s business in India. The deal was structured in such a manner that Vodafone\u2019s Netherlands entity acquired the 67% shareholding held by a Cayman Island company (Hutchison Telecommunications), in the Indian company, Hutchison Essar. Subsequently, the Indian tax authorities slapped a capital gains tax demand on Vodafone. Vodafone argued that it was not liable to pay the tax as there was no transfer of any capital asset in India. The Indian tax authorities argued that the deal was cleverly structure to avoid tax liability. The matter went up to the Bombay High Court which upheld the claim by the Indian tax authorities and ultimately to the Supreme Court which reversed the Bombay High Court\u2019s decision and held that the Indian tax authorities had no jurisdiction to impose tax on this transaction. The Supreme Court observed that unless a transaction was a complete sham and the sole purpose was avoidance of tax liability, companies are allowed to structure their deals in the most efficient manner within the existing legal framework.
<\/p>
Following the Supreme Court judgment, in 2012, the Indian government retrospectively amended its tax laws and reinstated the demand on Vodafone. This led Vodafone to invoke arbitration under the India-Netherlands BIT. These actions occurred during the rule of the UPA government in India. What is surprising is that even after the NDA led government came into power in 2014 with its promises of \u2018minimum government, maximum governance\u2019 and improving \u2018ease of doing business\u2019, while it criticised the retrospective tax law amendments, it did nothing to change the situation.
<\/p>
In 2017, Vodafone invoked a second arbitration proceeding relying on the India-UK BIT. The Indian government moved to challenge the second arbitration proceeding by filing for an anti-arbitration injunction before the Delhi High Court. This petition ultimately came to be dismissed as Vodafone undertook to consolidate the arbitrations under the India-Netherlands BIT and India-UK BIT.
<\/p>
History has shown that amendments to laws to specifically by-pass Supreme Court rulings have not been successful and are at best an attempt by the legislature to assert superiority over the judiciary. In the present case, the fact that the amendment also was targeted at a particular foreign investor sends out a wrong signal to foreign investors looking to invest in India. At a time when the economy is facing a downward trend and the current government\u2019s endeavour is to ensure ease of doing business in India, the government would do well to avoid such misadventures in the future. Media reports suggest that the Indian government may consider appealing the decision. Any future course of action would have to be carefully decided keeping in mind the overall policy of the government and the current state of affairs.
<\/p>
This decision of the PCA is also likely to have significance for other pending arbitrations between the Indian government and other foreign companies such as Cairn Energy and Nokia. Amongst others, in the Vodafone matter, the Indian government had argued that the BIT does not cover tax related issues and therefore, the PCA has no jurisdiction to adjudicate on this dispute. This argument has been rejected by the PCA. As a result, we may also see more foreign companies invoking BIT arbitrations to adjudicate their tax disputes.<\/p>","blog_img":"","posted_date":"2020-11-09 15:29:01","modified_date":"2020-11-09 15:29:01","featured":"0","status":"Y","seo_title":"Vodafone arbitration saga: Lessons for India","seo_url":"vodafone-arbitration-saga-lessons-for-india","url":"\/\/www.iser-br.com\/tele-talk\/vodafone-arbitration-saga-lessons-for-india\/4617","url_seo":"vodafone-arbitration-saga-lessons-for-india"},img_object:["","retail_files/author_1604915697_22634.jpg"],fromNewsletter:"",newsletterDate:"",ajaxParams:{action:"get_more_blogs"},pageTrackingKey:"Blog",author_list:"Karan Singh Chandhiok",complete_cat_name:"Blogs"});" data-jsinvoker_init="_override_history_url = "//www.iser-br.com/tele-talk/vodafone-arbitration-saga-lessons-for-india/4617";">
Karan Singh Chandhiok
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