Government to defend Vodafone's arbitration notice: Chidambaram

Finance Minister P. Chidambaram Thursday said the government will defend the arbitration notice from Vodafone Group Plc in its $2-billion tax dispute.

Telecom service provider Vodafone Wednesday said it had started international arbitration proceedings against the Indian government since both sides have been unable to find an "amicable means of resolving the dispute".

"Vodafone confirms that Vodafone International Holdings BV (VIHBV) has commenced an international investment arbitration against the Indian government under the Bilateral Investment Treaty (BIT) between India and the Netherlands," a company statement said.

"The BIT arbitration, which was filed on April 17, arises from the government's 2012 enactment of retrospective taxation on VIHBV's acquisition of indirect interests in Hutchison Essar Ltd in 2007, which the Supreme Court held was not taxable under the law at the time," it added.

"Since Vodafone and the Indian government have been unable to find an amicable means of resolving the dispute, Vodafone has commenced an international investment arbitration as a way to achieve resolution," the statement said.