While the Supreme Court’s decision in the case of Centre for Public Interest Litigation v. Union of India cancelling the 122 fraudulently issued 2G licences was considered by many as upholding the constitutional fundamentals of equality and equanimity, it has exposed the Indian government to actions under international investment arbitration for disregarding the very same principle of parity in context of their commitment to international trade.
The principle of international law on which such a claim will be based is failure of the Indian government to meet the necessary preconditions to invoking its right of expropriation through the above mentioned judgment. There was much speculation in the arbitration academia about the possibility of the same. Like all premonitions bad, it did come true with big conglomerates like Systemia Ltd. and Khaitan Pvt. Ltd. issuing notices of arbitration against the Indian government. Not surprisingly, the grounds for requesting such arbitration was unwillingness of the Indian Government to compensate the claimant for the losses arising out of its act of expropriation stemming from the SC judgment.
The tribunals would have to delve into the complex yet frequently visited conundrum of balancing the sovereign rights of a nation to regulate against the need of investor protection in international investment law. The article attempts to provide one of the first holistic picture of the possible jurisprudential arguments raised and the subsequent rebuttals that might follow in these arbitration proceedings.
The 2G license scam is considered to be one of the many reasons for the potential undoing of the 10 year long UPA government in India. Summarily, the dispute revolves around the cancellation of the 2G licenses which were issued by the Department of Telecommunications, Government of India by the Supreme Court after intensive investigation carried out by the Central Bureau of India and much public outcry. This judicial conclusion of cancelling 122 licenses was arrived at through the Supreme Court judgment in the case of Centre for Public Interest Litigation v. Union of India[i].