Summary:
In the Supreme Court alone, the tax dept.
is the petitioner in more than 95% of direct tax appeals.
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Every government in the world wants to market its countries readiness in helping the business to smoothly run its operations in their country.
As per World Bank’s Ease of Doing Business Report, 2020, India stands at 63rd position with New Zealand leading the chart.
One of the prime reason for India’s current not up to the mark performance is Centre’s refusal to honour arbitration awards.
The central government is also the biggest litigator having the power to retrospectively amend laws even after Supreme Court decisions.
India’s entangled legal and tax infrastructure lacks clarity and is constantly changing, making it difficult for the business plan a long tern business plan as per the laws of the land.
Constantly changing rules with legal delays running into decades is another key reason why most global firms working in India have arbitration clauses in their agreements.
The Government of India came up with world class arbitration laws in India through recent amendments —it even put in place fairly strict rules to prevent the awards from being challenged—was to ensure that firms were able to settle their disputes quickly and enable ease of doing business.
But quite the opposite is happening.
Here are some of the examples of the same:
Vedanta and Videocon have just won a $476-mn arbitration award in the Supreme Court (SC) pertaining to the Ravva oil and gas fields that they had jointly developed in the 2000s against the GOI.
The government and the private contractors had a dispute over how much of the costs could be recovered by the contractors and, after the dispute went into international arbitration in Malaysia, the private firms won.
The case has been disputed by the GOI in the Indian courts.
Reliance Industries won an award in 2016 for the Panna Mukta Tapti fields it was working on.