International arbitration is last option in Sistema case

Russian President Vladimir Putin’s visit on Monday means that talks on cancellation of 2G licences would surface to haunt the government. However, Russia believes that an international arbitration would be the ‘last resort’.

Talking to Deccan Herald over phone from New Delhi, the spokesperson of the Russian Embassy said, “We still hope that the issue can be resolved through discussions and we would resort to (international) arbitration only if nothing else works out.”

He added that the issue is more political than judicial and affirmed that at this moment they have no plans to ask India for a refund of Sistema’s approximately $3 billion investment in India, contrary to the fear expressed by Foreign Affairs Minister Salman Khurshid on Friday.

The spokesperson also said that discussions would also be on the agreement signed in 1994 between Russia and India for promotion and mutual protection of investments.
Under Clause 2 of Article 9 of the Agreement, if a dispute cannot be settled amicably within six months from the date (of dispute), the investor concerned may submit it to an ad-hoc International arbitration tribunal set up in accordance with the Arbitration Rules of United Nations Commission on International Trade Law (UNCITRAL).

Sources said that a top executive from Sistema was already in New Delhi to discuss the issue of 2G spectrum allocation and subsequent cancellation of licences, with Indian government officials. “We had expressed our concerns earlier and still stand by it that a solution is needed for the 2G issue,” the spokesperson explained.

The Russian President is also expected to have discussion on various bilateral issues like nuclear energy and other international issues and around 8-12 agreements are expected to be signed.

Bilateral trade between India and Russia in 2011 was about $9 billion; the two countries have set a target of reaching $20 billion by 2015.

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