Cairn Energy's dispute with the Indian Government has made
headlines across the globe. The case serves as a useful
reminder to foreign investors of the benefits of using bilateral
investment treaties to obtain relief in circumstances where they
have been unfairly treated by governments in foreign
jurisdictions.
The Dispute
The origins of this dispute lie in a separate, but similar case
between Vodafone and the Indian Government, arising out of
Vodafone's purchase of a majority share of a company,
Hutchison Whampoa, in 2007. Hutchison owned substantial assets in
India, and the Indian Government contended that Vodafone owed
capital gains and withholding tax, based on India's 1961
Income Tax Act. Vodafone disputed the Government's
interpretation of the Act.
