Vodafone had moved Hague-based International Court of Justice (ICJ) in March after arbitrators appointed by it and Indian government failed to reach a consensus on selection of a presiding judge of the three-member panel.
Presiding judge for a three-member arbitration panel set up to decide on the Rs 22,100-crore tax demand from Indian tax authorities on UK's Vodafone Group has been identified and an announcement is likely shortly. Vodafone had initiated two separate arbitrations under the India-Netherlands Bilateral Investment Treaty and the India-UK Bilateral Investment Treaty against the tax notice linked to a legislation that gave the I-T Department powers to raise retrospective demand.
While appointment of arbitrators in the dispute raised under the India-UK treaty has not yet taken off, the two sides had named one arbitrator each under the Dutch treaty. "The presiding arbitrator was pending and the judge has now been identified. I think the announcement will be made shortly," a source said.
Vodafone had in March moved the Hague-based International Court of Justice (ICJ) after arbitrators appointed by it and the Indian government failed to reach a consensus on selection of a presiding judge of the three-member panel. Vodafone International Holdings BV had on April 17, 2014, served a notice of arbitration under the Dutch Bilateral Investment Treaty seeking resolution of the tax demand imposed by India through a tax law with retrospective effect to sidestep a Supreme Court judgement that went in the company's favour.
Conciliatory proceedings were initiated to resolve the dispute, but differences led to a breakdown following which the arbitration was initiated. The government had in June 2014 appointed former chief justice of India RC Lahoti as arbitrator while Vodafone named Canadian trial lawyer Yves Fortier as its choice.
The two had zeroed in on Abdulqawi Ahmed Yusuf of ICJ as the presiding arbitrator. However, Lahoti recused himself from the case in May 2015 and a month later, Yusuf too declined to be part of the panel. Thereafter, India in July last year named Costa Rica- based lawyer Rodrigo Oreamuno to arbitrate on its behalf.
But Oreamuno and Fortier have not been able to decide on a presiding arbitrator, prompting Vodafone to move ICJ. The Government had raised a tax demand of Rs 7,990 crore on Vodafone for failing to deduct tax on capital gains made over its US $11-billion acquisition of 67% stake in the mobile-phone business owned by Hutchison Whampoa in 2007.
Vodafone in May had stated that it received a reminder of an outstanding tax demand of Rs 22,100 crore on February 4 this year. "The latest reminder threatens enforcement action if the demand is not satisfied," it had said. The tax demand included interest and penalty. On June 15, 2015, Vodafone had served a trigger notice on the Indian government under the United Kingdom-India Bilateral Investment Treaty (UK-BIT) in respect of retrospective tax claims under the Finance Act, 2012.
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