India's Top Lawyer Upholds Opinion Baring Foreign Investors Seeking Compensation

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In dia's Attorney General has repeated his stance that foreign investors in networks that later had their 2008 mobile licenses cancelled by the Supreme Court cannot seek redress under bilateral investment protection treaties.

The protection pacts were signed by the Indian government with a number of countries, which are often then used as bases for holding companies when firms are making investments into India.

A number of overseas investors, including Telenor, Sistema and Axiata have filed notices seeking arbitration under the bilateral treaties.

The Attorney General, Goolam E Vahanvati earlier ruled that the "'alleged loss which emanates out of orders passed by the court does not constitute a cause of action against the government" and has now upheld that ruling.

As the Supreme Court's actions were independent of the government, the bilateral treaties offering protection from government actions may not be valid. Both the Ministry of External Affairs and the Commerce Ministry had asked him to review his decision as it was felt that the Court, while independent, could be seen as an arm of the government, and its actions subject to the treaties.

"The constitution of India has a clear demarcation of the respective jurisdictions of the various organs of State. It recognizes the principle of separation of powers. The judiciary exercises powers within its own sphere and under our constitutional setup the executive exercises no control over the judiciary. As such, the government of India, cannot be held responsible for judgements of the Courts," Vahanvati declared.

The situation is different for Vodafone's tax dispute, which has threatened to seek arbitration, as it was the government that overturned the Court ruling by changing the tax laws.

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