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According to Goolam E. Vahanvati, Attorney General of India, foreign telecom players facing licence cancellation cannot claim damages under the bilateral investment protection treaties (BIPA), say news reports.
Following the cancellation of 2G licences by the Supreme Court in February this year, foreign investors like Telenor, Sistema, Axiata have invoked BIPA to protect their investments in the telecom sector. Earlier, the Department of Telecommunications? (DoT) approached the Attorney General of India for his views on invocation of BIPA by foreign players.
Responding to DoT?s request, the Attorney General of India has observed that the foreign operators cannot claim damages under BIPA because the decision to cancel the 2G telecom licences was taken by the Supreme Court and not the government. According to him, the claim of damages by foreign investors from the government is based on a complete misunderstanding of the constitutional position prevailing in India.
In his note to DoT, the Attorney General of India has stated that under the country?s Constitution, there is 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. In his note to DoT, the Attorney General of India further states that the claim of damages depends on whether the foreign investors did a proper due diligence before investing in the domestic companies. And this will be a matter of evidence. However, the fact that the promoters (of domestic companies) are being prosecuted under criminal law is certainly a relevant factor with regard to the maintainability of the claim for damages by foreign investors.
