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The Ministries of External Affairs and Commerce have opposed the legal opinion given by the Attorney-General of India, Goolam E. Vahanvati, on invoking bilateral investment protection treaties in dealings with foreign players.
The Ministries’ view is that in the international court, the Indian state is seen as a single entity, which includes the judiciary.
The Attorney-General had earlier said foreign telecom investors cannot claim damages under bilateral investment protection treaties as the decision to cancel 2G licences was made by the Supreme Court and not the Government.
Separation of powers
Vahanvati had said the claim of damages from Government is based on a complete misunderstanding of the prevailing constitutional position.
“Under the Constitution, there is a separation of powers between the legislature, the executive and the judiciary. The alleged loss which emanates out of orders passed by court does not constitute a cause of action against the Government,” the AG had said in his opinion note.
In response, the Ministry of External Affairs has said that while the AG is right from the point of domestic law and the Constitution, the bilateral treaties provide for dispute resolution under international law. “
The arbitration tribunals do not function under domestic law. For the outside world, the Indian state is a single entity and the conduct of any organ entity is attributable to the state of India,” the Ministry of External Affairs has stated, according to an internal note seen by Business Line .
Business impact
The Department of Economic Affairs and the Commerce Ministry have backed this view and want the AG to review his opinion.
They want the court’s actions to be defended by highlighting on the companies doings.The Department of Telecom had sought the AG’s opinion after several foreign players, including Telenor, Sistema and Axiata, issued notices to the Government claiming protection of their investments under the various Bilateral Investment Promotion and Protection Agreements (BIPAs).
These operators’ telecom businesses were severely impacted after the Supreme Court cancelled all licences issued on or after January 10, 2008.
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