Can Nokia Successfully Invoke the India - Finland BIT?: An Analysis
Published 12 June 2014
Abstract
This paper attempts to analyze the impending Nokia tax dispute where the retrospective income tax legislation of India triggered Nokia’s invocation of Article 9 of the India Finland BIT. Over the last one decade, India has seen a considerable rise in the number of investment disputes that have arisen out of such agreements. Investors such as Vodafone and Nokia have invoked dispute resolution clauses of the BIT because of the retrospective amendment made by the Finance Act of 2012. The Nokia dispute holds importance as freezing of assets by the Indian tax authorities has caused the Chennai plant to be placed out of the global Microsoft Nokia deal. The author examines the practice of retrospective tax legislations across the world and then moves on to trace the history of the Nokia dispute before delving into the BIT aspects of it. The next section examines the “fair and equitable treatment and full protection and security”, “expropriation” and “transfer of payments” clauses that can be invoked by Nokia to argue violation of the BIT. The author concludes with India’s stance on such disputes as the future doesn’t seem as bleak with the government working out changes in the BIT and promising a stable legal framework to its investors.