The Supreme Court of India today allowed the appointment of arbitrators in Vodafone’s U.K. tax arbitration but ruled that proceedings will not start before Jan. 10 next year.
The apex court was hearing the central government’s plea against a Delhi High Court order that had allowed the parties to appoint arbitrators in this second arbitration dispute between the Indian government and the U.K.-based telecom operator.
In an interim order in August 2017,the Delhi High Court had restrained Vodafone from participating in the second arbitration case but on Oct. 26 it allowed the appointment of arbitrators and initiate arbitration proceedings against India under a treaty with the U.K. This was in connection with a Rs 11,000 crore tax demand raised against the company in relation to its $11 billion deal to acquire a stake in Hutchinson Telecom in 2007.
The Delhi High Court on Jan. 8,9 and 10 will hear the Centre’s objections to Vodafone starting a new arbitration in the U.K.
The first arbitration relates to the Vodafone retrospective tax case. In this, the Bombay High Court had held that Vodafone was liable to pay taxes in relation to the transactions with Hutchinson. The Supreme Court had, however, in 2012 held that Vodafone was not liable to pay taxes.
Subsequently, the United Progressive Alliance government brought the Finance Bill clause with retrospective effect which once again made Vodafone liable to pay taxes.