New trade treaty may be scrapped
The new treaty has kept any tax related dispute out of such treaties
New Delhi: India is closing loopholes by which MNCs are dragging the country into international arbitration. The new Indian Model Bilateral Investment Treaty (BIT), which has been drafted by the finance ministry has kept any tax related dispute out of such treaties.
Also it will not be possible to review the merits of a decision made by an Indian judiciary under BITs. Indian government is planning to scrap or re-negotiate BITs after increasing instances of MNCs dragging matters to arbitration proceedings abroad. Vodafone, Nokia and recently Cairn Energy have threatened or filed international arbitration against India over tax disputes. After Supreme Court cancelled 2G licences, many international telecos also filed arbitration against India under earlier BITS.
Nokia had invoked the Bilateral Investment Promotion and Protection Agreement India has with Finland to resolve the dispute with I-T department over Rs 21,000 crore in unpaid dues. Currently, some 72 such agreements are in force between India and foreign countries. The draft will also not allow “review of the merits of a decision made by a judicial authority”.