India: Delhi High Court Takes A Bite Off Vodafone's Bit Claim (India v Vodafone)

Last Updated: 11 September 2017
Article by Kshama Loya Modani and Moazzam Khan

Arbitration analysis: Moazzam Khan, co-head of international dispute resolution practice and Kshama Loya, a senior member of the same team at Nishith Desai Associates consider the recent decision in India v Vodafone Group PLC UK in which the Delhi High Court held that a foreign investor cannot be permitted to pursue multiple claims challenging the same action of the host State under diverse BITs through different corporate entities in the same vertical chain. The Delhi High Court re- ferred to the 'group of companies' doctrine to fasten economic identity upon parties in the dual claims, in addition to assessing identity of claims, cause of action and reliefs in the investment treaty arbitration proceedings.


Union of India v Vodafone Group PLC United Kingdom and Anor, I.A.9460/2017 in CS(OS) No. 383/2017; order dated August 22, 2017 (not reported by Lexis®Nexis UK)

The Delhi High Court held that:

  • multiple claims cannot be permitted by corporate entities in a single vertical chain - against the same measure of the host State – under various bilateral investment treaties / bilateral invest- ment promotion and protection agreements('BIT / BIPA')
  • anti-arbitration injunction can be issued against a forum having exclusive jurisdiction if the pro- ceedings are oppressive, vexatious and result in abuse of process


The claim under India-Netherlands BIPA

Vodafone Group PLC, UK ('Vodafone' or the 'Defendants') is the parent company of several subsidiaries. On April 17, 2014, Vodafone International Holdings BV ('VIHBV'), a subsidiary of the Defendants, initiated arbi- tration proceedings against the Republic of India ('India' or the 'Plaintiff') under the India-Netherlands BIPA.

The claim challenged retrospective amendment of Section 195 of the Indian Income Tax Act read with Sec- tion 119 of the Indian Finance Act, 2012 by the Indian government, to bring VIHBV under the tax-liability net for acquisition of stake in an Indian company. The retrospective amendment was carried out by the Indian Parliament after the Supreme Court of India quashed the tax-demand.

The claim under India-United Kingdom BIPA

During pendency of arbitration proceedings under the India-Netherlands BIPA, the Defendants initiated arbi- tration against India on January 24, 2017 under the India-United Kingdom BIPA ('India-UK BIPA'). The De- fendants challenged the same actions of the Republic of India under the aforesaid proceedings ie retrospec- tive amendment of Section 195 of the Indian Income Tax Act read with Section 119 of the Indian Finance Act, 2012.

India filed a suit before the Delhi High Court (the 'Court') seeking an anti-arbitration injunction against the Defendants for the initiation of proceedings under the India-UK BIPA.

What did the Delhi High Court decide?

The Court, by virtue of an ex-parte interim order, restrained the Defendants from initiating or continuing arbi- tration proceedings under the India-UK BIPA. The reasoning of the Court is encapsulated below.

Vertical chain of entities

At the outset, the Court recognised that several corporate entities may exist in a vertical chain controlled by a single investor. In the wake of a violative measure by the host State, multiple treaties may procedurally allow the entities in the chain to bring claims against the host State; in effect permitting the controlling investor to bring multiple claims against a host State from several stand-points in the vertical chain.

The Court acknowledged that this would constitute abuse of legal rights by the investor. The Court relied on the case of Orascom TMT Investments S.à r.l. v People's Democratic Republic of Algeria (ICSID Case No. ARB/12/35)—Award dated 31 May 2017, wherein it was held that permitting such claims would result in the risk of multiple proceedings, multiple recoveries, conflicting decisions and waste of resources. This would also conflict with promotion of economic development of the host State where claims have been initiated for protection of investment.

Group of companies

The Court sought to take recourse from the group-of-companies doctrine to establish identity of parties in the parallel claims under the BITs. The Court relied on the decision of the English court in the case of DHN Food Distributors Ltd and Ors v London Borough of Tower Hamlets [1976] 3 ALL ER 462, 467 (relied on by the Delhi High Court in Pankaj Aluminium Industries Pvt. Ltd v M/s. Bharat Aluminium Company Ltd (2011) IV AD (Delhi) 212 (not reported by Lexis®Nexis UK)), wherein it was acknowledged that there was a general tendency to ignore separate legal entities of various companies within a group, and to look at the economic entity of the whole group. Relying on the aforesaid doctrine, the Court stated that the Defendants and their subsidiary VIHBV seemed to constitute a single economic entity and form a part of the same group being run, governed and managed by the same set of shareholders.

Identity of cause of action & reliefs

The Court assessed the reliefs sought by the Defendants and VIHBV in their respective claims under the India-Netherlands BIPA and the India-UK BIPA. The Court acknowledged that the relief sought was starkly identical ie the parties sought declaration of a breach of BIT by India on account of retrospective amendment to the Indian Income Tax Act read with the Indian Finance Act, 2012. The Court held that there was not only duplication of parties and issues, but also the identity of relief in the parallel proceedings.

Anti-(treaty) arbitration injunctions

The Court relied on the of landmark judgment Modi Entertainment Networks v WSG Cricket Pte Ltd (2003) 4 SCC 341 (not reported by Lexis®Nexis UK), enunciating principles for grant of anti-suit injunctions. It held that an injunction can be passed by a court of natural jurisdiction ie India in the instant case, to restrain a party from initiating proceedings in a foreign forum, albeit being forum of choice and exclusive jurisdiction, if the said forum is oppressive or vexatious. The Court also stated that India is the natural forum for litigation of the Defendants' claim against the Plaintiff.

Abuse of process

The Court held that in the wake of the economic identity of parties, identical causes of action being the ret- rospective amendment of legislation by India and identity of relief prayed for in the parallel proceedings un- der the India-Netherlands BIPA and the India-UK BIPA, the Court held a prima facie view that initiation of independent proceedings under the two BITs constituted abuse of process of law at the hands of the De- fendants, both on account of the Defendants' themselves and through their subsidiaries. The Court consid- ered it inequitable and unjust to permit the Defendants from continuing the arbitration under the India-UK BIT.


Anti-arbitration injunctions (more so investment treaty arbitrations) go a long way in damaging a pro-arbitration and an international business-friendly reputation that India is striving to painstakingly build. Nevertheless, the principle on which the judgment is delivered is sound and has been gaining popularity the world over. Initiation of multiple proceedings under different BITs by entities forming part of the same group of companies, raising virtually identical complaints would amount to abuse of process of law.

One does wonder whether it would have been more prudent to allow the arbitral tribunal to determine its own jurisdiction, in light of this very objection raised by India in the arbitration proceedings. After all, even in the instant case, the Court does note that it was an investment treaty award in Orascom v Algeria which had laid down that initiation of multiple proceedings under different BITs, such as in the present circumstances, would tantamount to abuse of process of law.

Considering this remains an ex-parte interim order, it will be interesting to follow how this case develops if and when the Vodafone entities enter appearance and set out their formal defence.

This article was originally published in the 25th August, 2017 edition of LexisNexis

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Kshama Loya Modani
Moazzam Khan
Similar Articles
Relevancy Powered by MondaqAI
Nishith Desai Associates
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Nishith Desai Associates
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions