On Friday, Vodafone group stated that it had won an international arbitration case against the Indian Government. With this, one of the most high-profile disputes in the country involving a tax claim of $2 billion.
In 2012, India’s top court ruled in favour of Vodafone but the government changed the rules to enable the tax deals. In 2014, Vodafone initiated arbitration proceedings against the Indian Government.
This international arbitration was heard in The Hague which ruled the imposition of India’s tax liability on Vodafone, as well as penalties were in breach of the investment treaty between Netherlands and India.
India claimed a total damage of Rs 27,900 crores including the 2$ billion in tax. The tribunal in its response said that the governments demand is in breach of “fair and equitable treatment” and it must seek its dues from Vodafone. It also ordered India to pay 4.3 million pounds to the company. Vodafone said in a statement the amount of the award was confident in shares in the company’s India unit, Vodafone Idea, ended 13% higher on Friday. India’s finance ministry said it will carefully study the award along with its lawyers.
This judgement brings an end to one of the most long controversial disputes in India under the international treaty agreements. To reduce the future arbitration claims, India has such an agreement with over 50 countries.