Loop's investor serves notice to govt on int'l arbitration

Khaitan Holding Mauritius Ltd asked govt to resolve dispute arising out of cancellation of all its 21 licences by SC in 2G case on February 2, 2012

Loop Telecom investor KHML has served final notice to the government stating that it would proceed before international arbitrator if the third round of talks scheduled for September 13 fails.

"Khaitan Holding Mauritius Ltd has made claim of about Rs 3,764 crore and third round of meeting is scheduled for September 13 to arrive at amicable solution.

"They have issued final notice while we are yet to meet," said an official source.

No immediate comments were received from the company.

The Mauritius-based investor first served notice to the government in April 2012 for resolving disputes under Bilateral Investment Promotion and Protection Agreements (BIPA) following cancellation of all its 21 licences by the Supreme Court in the 2G case on February 2, 2012.

Mauritius-based Kaif Investments and Capital Global, majority investor in Loop Telecom had served notice under BIPA in April 2012, following which government representatives have held two round of discussion.

Now Kaif Investment and Capital Global are jointly being represented as KHML which has served final notice for international arbitration.
 
Though exact date of notice could not be ascertained, it is learnt to have been served after discussion held on April 4, 2013 was not found fruitful by the foreign investor.

India signed BIPA with Mauritius on September 4, 1998 and it took effect from June 20, 2000.

As per the agreement, if disputes between investors of the two nations are not resolved amicably, the aggrieved party can go for arbitration or through international conciliation under the Conciliation Rules of the United Nations Commission on International Trade Law.

Indian team comprising officials from the Department of Telecom and the Ministry of External Affairs had two round of meetings with KHML representatives but could not arrive at any conclusion.

KHML has sought refund of $166.89 million which includes interest on direct investment in made in Loop Telecom and Rs 2,457.53 crore, including interest, on licence fee that it paid in 2008. The firm has also asked for release of bank guarantee of Rs 404 crore at zero cash cost to the firm.

Government had decided to adjust the money of telecom operators, affected by the apex court order, if they participate in spectrum auctions to address concerns raised by foreign investors affected the apex court judgement.

Loop Telecom, however opted out of both auctions that were held in November 2012 and March 2013 and hence could not get benefit of government's decision.