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TELECOM COMPANY VODAFONE AGAINST INDIAN TAX DEPARTMENT


To understand the benefits of arbitration more effectively, let’s look at one of the recent case studies. The telecom company Vodafone and Indian Tax department.
Following is not a detailed analysis of the case however, the intent is to show the benefits that come with opting arbitration to resolve your disputes.


This international arbitration case is an interesting one to look at. Indian tax department claimed $2 billion tax from Vodafone company including other dues. The case was ruled in Hague. But the international arbitration of this case reversed the circumstances.
The tribunal (sole arbitrator) declared that the claims Indian tax department is making are in violation of the FET standard under Article 4(1) of the India-Netherlands BIT that is; it has failed in protecting the protection act agreement between the two countries.

The government was stretching a case on a telecom company according to its own comfort, the filing of the case by the telecom company through arbitration helped it to recover the loss that would have been made if further it was delayed.
The telecom company Vodafone filed that the tax claims are against the “fair and equitable treatment” included in the agreement signed by both the countries.

The judgement of this case has put Indian government in a position where it is now blaming the previous political party in power. Nevertheless, justice was served in time and all the biases were kept aside.

How was arbitration successful here?

Indian government took this case to Bombay high court and ruled that the telecom company is liable to pay the said amount as tax and other dues as well. But the telecom company took the case to the international arbitrator which not only helped in resolving the case impartially but also time efficiently. The long-held case was finally resolved. Ensuring that all rights are protected of the individual as well as the company.

In return Indian government was asked to pay 40 crore (approx.) rupees to the telecom company for the damages it had made to the company and including all the legal claims. Damaging and violating the agreement, Indian government was accused of non-fair treatment and false tax claims.

This could have been delayed even more but arbitration makes it simple for you, with your liable documents you just have to file your claim rest is assured in time. The procedure is simply to serve justice looking at all the provided and demanded proofs.
In this case, Vodafone telecom company saved not only its economical investments but also its reputation in the market.

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