Dispute over the 2007 acquisition

In 2007, Vodafone purchased an indirect stake in a company in India from Hutchison Telecommunications International Limited (HTIL). After the acquisition was completed, the Indian tax authorities raised a tax demand against Vodafone, even though the transaction took place outside India between two non- Indian entities and Vodafone was the buyer, not the seller.

The Indian tax authorities’ actions led to a protracted legal dispute, culminating in a hearing before the Indian Supreme Court, which concluded unambiguously and unanimously, in January 2012, that no tax was due. Although the country’s highest court had vindicated Vodafone’s position, the Indian government subsequently changed the law to introduce retrospective taxation rules and invalidated the Supreme Court judgment in Vodafone’s favour. Those rules, which were backdated with effect from 1962, were designed to require taxes to be paid retrospectively which, as the Supreme Court had concluded, could not be levied against Vodafone under any reasonable interpretation of the evidence or the law.

We continue to maintain that no tax is due on the 2007 acquisition and that any attempts to impose such a tax, under the retrospective tax rules, would be in breach of India’s obligations under international law. We have had discussions with the Indian government since then; however, it does not accept that its conduct is in breach of international law, and we have been unable to agree on a way forward without arbitration.

On 17 April 2014, we filed a Notice of Arbitration under the Bilateral Investment Treaty between the Netherlands (where the Vodafone holding company that entered the relevant transaction is based) and India, in an effort to resolve the dispute. The Indian government and Vodafone have since both appointed arbitrators, and the President of the International Court of Justice in The Hague has appointed Sir Franklin Berman QC as the presiding arbitrator. The government of India formally challenged the jurisdiction of the Dutch Bilateral Investment Treaty and on 19 June 2017 the tribunal decided to try these jurisdictional objections along with the merits of Vodafone’s claim. The arbitration hearing took place in February 2019. The tribunal issued the award on 25 September 2020 and unanimously ruled in Vodafone’s favour. However, in February 2021, the Indian Government has challenged the verdict of international arbitration court’s verdict in Singapore.

Vodafone Group Plc commenced a separate claim under the UK Bilateral Investment Treaty (UK BIT) with India in January 2017. India has applied to the Indian courts to prevent Vodafone from progressing the UK BIT tribunal and an interim order was made to that effect. That interim order was, however, varied to permit the formation of the tribunal now consisting of Professor Campbell McLachlan (Presiding Arbitrator), Mr. Neil Kaplan CBE QC SBS (appointed by Vodafone) and Professor Marcelo G Kohen (appointed by India). In May 2018 the Delhi High Court dismissed the interim order preventing it from pursuing its UK BIT claim. The Indian Government appealed the decision and the hearings took place from 2018 to 2020, with frequent adjournments. In the meantime, Vodafone has undertaken to take no steps advancing the UK BIT pending resolution of the Indian Government’s appeal. The Delhi High Court will decide how to deal with these proceedings in light of the Indian Government’s application to set aside the arbitration ruling that was awarded in favour of Vodafone.  

Hutchison Group action

In November 2016, the Indian tax authorities commenced action against HTIL (part of the Hutchison Group) itself for the first time, issuing the company with a draft assessment order under which the authorities are seeking capital gains tax allegedly due in India on the 2007 transaction. The Hutchison Group disputes the validity of the assessment and any liability for taxes in India.