The Attorney General has declined to change his view that foreign telecom players cannot invoke bilateral investment treaties, as the decision to cancel 2G licences was made by the Supreme Court and not the Government.
The Department of Telecom had initially 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
The Ministries of External Affairs and Commerce had 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 was that in the international court, the Indian State is seen as a single entity, which includes the judiciary.
Claim of damages
The Attorney-General has, however, said that the claim of damages from Government is based on a complete misunderstanding of the prevailing constitutional position. “The Constitution of India has a clear demarcation of the respective jurisdictions of the various organs of the State. It recognises the principle of separation of powers. The judiciary exercises powers within its own sphere and under our constitution set up the executive exercises no control over the judiciary. As such Government of India cannot be responsible for judgement of the courts,” Vahanvati said, explaining why he was sticking to his earlier view.
The Ministry of External Affairs had 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 had stated.
It had also raised a similar case of Australia based White Industries wherein an international tribunal decided against the Government of India for failing to provide the foreign firm — White Industries of Australia — with “effective means of asserting claims and enforcing rights” vis-a-vis the Indian PSU, Coal India Ltd.
In response, the AG has said that the award was not a judgement and has no precedential value. Vanahvati also said that it is difficult to accept the principle that the constitutional system in our country can be displaced by broad principles of international law. He said that countries entering into bilateral treaties should have known constitutional set up of India.