The Department of Telecommunications (DoT) wants foreign companies that win auctioned spectrum to commit they would not claim damages for cancelled licences under international treaties. It is seeking the insertion of a clause to this effect in the auction terms.
International telcos such as Russia’s Sistema and Norway’s Telenor and foreign investment funds such as KAIF Investments Mauritius and Capital Global Ltd (investors in Loop Telecom) have sent legal notices to the Indian government under the respective Bilateral Investment Promotion & Protection Agreement (BIPA) or Comprehensive Economic Cooperation Agreement (CECA).
The action followed the Supreme Court-directed cancellation of 122 telecom licences, including those held by foreign companies. India has a BIPA with Russia and Mauritius and a CECA with Singapore, through which Telenor’s investments were channelled.
The DoT has sought the Attorney General’s opinion whether such a clause can be incorporated. The department has been of the opinion that since the licence cancellation was a court order, BIPA or CECA clauses would not apply.
Telenor and Sistema are expected to bid in the forthcoming 2G spectrum auction. Another foreign player, Etisalat, has not made it clear if it would participate.
The DoT has also sought the law ministry’s opinion on whether foreign telcos or investors can claim damages under bilateral agreements if they misinterpreted facts, which led to the wrongful determination of licence eligibility. It has also asked whether foreign entities that invested in domestic companies whose promoters have been prosecuted on criminal charges can claim damages.
The department has also sought legal opinion whether damages can be claimed if licences have been terminated on account of violation of licence conditions.
In the context of the legal notices, the DoT has sought legal opinion whether the affected parties need to first exhaust all legal remedies in India before resorting to international treaties.