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Russian conglomerate Sistema JSFC has invoked the Bilateral Investment Treaty (BIT) between Russia and India to protect its investments in 2G mobile firm Sistema Shyam. Sistema owns 56.68 per cent stake in the Indian mobile venture, 21 licences of which have been cancelled by the Supreme Court.
Sistema sent a formal notice to Indian authorities, notifying them that the cancellation of licences is contrary to India's obligations under the treaty. The Russian major wants the Government to settle the dispute relating to the revocation of Sistema Shyam's telecom licences within six months.
“If the dispute is not amicably resolved by August 28, 2012 Sistema reserves the right to commence proceedings against The Republic of India as provided in the BIT,” the company said in a statement. Letters have been sent to the Ministries of External Affairs, Finance and Communication and Information Technology.
Apart from Sistema, the Russian Government has invested $600 million in the venture. The Russian Prime Minister, Mr Vladimir Putin, had himself initiated this investment in the Indian company.
Conciliation procedures
Sistema has invoked its right under Article 9.1 of the BIT, which came into force on August 5, 1996. The procedures for the amicable resolution of such disputes include conciliation procedures under the Conciliation Rules of the UN Commission on International Trade Law.
Mr Vsevolod Rozanov, President and CEO, Sistema Shyam TeleServices Ltd, said: “Our investors including Sistema JSFC and Rosimushestvo, the Russian Federal Agency for State Property Management, are being penalised for acting in good faith and in reliance on the appropriateness of procedures established by India's telecommunications authorities.”
SSTL offers CDMA-based mobile services under the MTS brand to more than 15 million customers. It employs over 3,500 employees, operates through 300,000 retailers and has made investments of over $3.1 billion, the statement said. To protect its business, the company plans to contest the Supreme Court order by filing a review petition this week.
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