Russian conglomerate Sistema on Tuesday said it haD asked the Indian government to honour the ‘Bilateral Investment Treaty' (BIT) to protect its investments to the tune of $3.1 billion in the telecom joint venture, Sistema Shyam TeleServices Ltd. (SSTL), with the Shyam Group, setting a six-month deadline. The company is also planning to file a review petition in the Supreme Court against cancellation of its telecom licences.
Sistema, in a statement released from Moscow, said “it has sent a formal notice to the Republic of India notifying it of a dispute under the Bilateral Investment Treaty (BIT) between the Government of the Russian Federation and the Government of the Republic of India.” Sistema owns 56.68 per cent in SSTL, while the Russian Government has a stake in Sistema.
“Sistema believes that the cancellation of SSTL's licences following Sistema's investment of billions of dollars into the Indian cellular sector is contrary to India's obligations under the BIT, including obligations to provide investments with full protection and security and obligations not to expropriate investments,” it noted.
“The formal notice requests the Republic of India to settle the dispute relating to the revocation of SSTL's 21 telecom licenses in an amicable way within six months. If the dispute is not amicably resolved by August 28, 2012, Sistema reserves the right to commence proceedings against the Republic of India as provided in the BIT,” the Russian firm said.
Sistema has invoked its right under Article 9.1 of the BIT signed between the Government of the Russian Federation and the Government of India for the promotion and mutual protection of investments on December 23, 1994, which came into force on August 5, 1996.
Article 9.1 of the BIT provides an investor from one contracting party and the other contracting party with an opportunity to amicably resolve a dispute arising in relation to investments made by the investor in the territory of the State of the other contracting party. The procedures for the amicable resolution of such disputes include conciliation procedures under the Conciliation Rules of the United Nations Commission on International Trade Law. In a statement, SSTL President and CEO Vsevolod Rozanov said: “We have always maintained that all our investors, including Sistema JSFC and Rosimushestvo, the Russian Federal Agency for State Property Management, are being penalised for acting in good faith and in reliance on the appropriateness of the procedures established by India's telecommunications authorities…to protect its business, the Company also plans to contest the Supreme court order by filing a review petition within this week before the highest court of the land.”