Russia’s Sistema JSFC sent a notice to the government of India on Tuesday to settle the dispute over the cancellation of its 21 licences, in six months, otherwise it would start proceedings against the government as provided in the bilateral investment treaty (BIT). It also plans to file a review petition in the Supreme Court this week against the order.
“If the dispute is not amicably resolved by August 28, Sistema reserves the right to commence proceedings against India as provided in the BIT,” Sistema said in a statement.
Sistema said it had a strong case and reserved the right to commence proceedings against India before an international arbitration tribunal set up in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law and/or in any other available forum, if the dispute was not settled amicably in six months.
In its order on February 2, the Supreme Court ordered cancellation of 122 licences issued in January 2008 by the then telecom minister, A Raja. Twenty one of the 122 licences belonged to Sistema Shyam TeleServices Ltd (SSTL), in which Sistema owns 56.68 per cent.
SSTL chief executive and president Vsevolod Rozanov said, “Sistema JSFC, the majority shareholder in SSTL, has invoked its right under the BIT and has approached the Indian government to protect its investments in the country. We have always maintained all 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 the procedures established by India’s telecommunications authorities.”
To protect its business, the company was also planning to contest the Supreme Court order by filing a review petition within this week, he added.
SSTL, which has a subscriber base of 15 million, offers CDMA-based mobile services under the brand name MTS. Sistema has invested about Rs 15,000 crore in India.
In the statement, Sistema said it had invoked its right under Article 9.1 of BIT. “The article provides an investor from one contracting party and the other contracting party with an opportunity to amicably resolve a dispute arising in relation to investments made by the investor in the territory of the state of the other contracting party. The procedures for the amicable resolution of such disputes include conciliation procedures under the Conciliation Rules of the United Nations Commission on International Trade Law,” Sistema said.
The letter has been sent to the external affairs, finance and communication and information technology ministries. “Sistema believes the cancellation of SSTL’s licences following investments of billions of dollars into the Indian cellular sector is contrary to India’s obligations under the BIT, including obligations to provide investments with full protection and security and obligations not to expropriate investments,” it added.
