As deadline expires for out-of-court settlement

Anticipating legal action by Sistema, the Department of Telecom has sent the Law Ministry an SOS to ready a team of lawyers to fight any arbitration.

Sistema had set a deadline of August 28 to resolve the licence cancellation issue out of court but so far the Indian authorities have not been able to address its concerns.

licences scrapped

The Russian major had threatened to drag India to international court for cancelling the mobile telephony licences owned by its Indian joint venture, Sistema Shyam. The Supreme Court cancelled all licences issued in or after January 2008 on grounds that they are illegal. According to Sistema, the licences given to Sistema Shyam should be treated differently because it had taken CDMA spectrum while the others involved had taken GSM spectrum.

The alleged scam had happened because there was a huge demand for GSM spectrum and the then Telecom Minister A. Raja purportedly distorted the first-come-first-served policy to favour a few. Sistema was the only player to have sought CDMA spectrum. The Russian major has invoked the provisions of the Indo-Russian bilateral treaty and sought protection of its investments.

However, the Indian Government has so far not been able to deal with Sistema’s concerns separately. An inter-ministerial group was formed to deal with all such cases but no final decision has been taken on the future course of action. There is a difference of opinion on the basic legal framework under which India will put forward its case to justify the cancellation of licence.

While the Attorney General is of the view that the Supreme Court’s actions cannot come under the purview of such international bilateral treaties, other wings of the Government, including the Ministry of External Affairs, believe all Indian agencies will be seen as part of the State by international courts.

Curative petition

Sistema Shyam has separately filed a curative petition with the Supreme Court urging it to reconsider the order to cancel its licence. But as the deadline set by the Russian company in its notice to the Indian Government has expired, DoT wants to be ready for all eventualities.

“This is urgent in context of the fact that the time line for amicable settlement with Sistema JSFC and the Government of India expired on August 28, 2012, and Sistema JSFC may possibly now seek arbitration,” DoT stated in a letter sent to the Law Ministry, adding that a panel of at least two arbitrators with domain knowledge of the telecom sector should be firmed up at the earliest.

Thomas.thomas

@thehindu.co.in

(This article was published in the Business Line print edition dated September 20, 2012)
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