NEW DELHI, July 29: The government has asserted that Russian businessmen-owned ByCell cannot claim protection under bilateral pacts due to withdrawal of permits for launch of mobile services, saying it was well within its rights to act in its security interests.
ByCell, a Switzerland-registered firm whose letters of intent to launch mobile services were withdrawn by India’s Department of Telecommunications (DoT) in 2009 on security grounds, had last month sent a notice to the government seeking compensation for its losses.
“We have all the rights to take action for the protection of our essential security interest and there is no breach of Russia-India BIPA and Cyprus-India BIPA,” DoT sources said.
ByCell is promoted by Russian businessmen through Tenoch, which is based in Cyprus. Tenoch owns 97 per cent stake in ByCell Holdings AG, which is registered in Switzerland and this entity owns 73.79 per cent stake in ByCell India.
The government has constituted an inter-ministerial group headed by Secretary, Department of Economic Affairs to discuss issues relating to investments dispute arising out of alleged breach of provisions of BIPA.
Article 3 (3) of the Russia-India Bilateral Investment Protection Agreements (BIPA) states that “the provisions of this agreement shall not preclude the application by either contracting party of measures necessary to safeguard its essential security interest”.
Also, the Cyprus-India BIPA states that “…Nothing in this agreement preclude the host contracting party from taking action for the protection of its essential security interests.”
DoT sources maintained the decision to withdraw letters of intent was to protect national security interest and as such did not violate any BIPA.
ByCell, promoted by Russian businessmen, had invoked BIPA by sending a legal notice to DoT threatening to drag Indian government to international arbitration.
The company through their legal representative Covington and Burling, has alleged that the company was subject “to grossly arbitrary and discriminatory treatment during the licensing process”, in 2006 and in 2008.
ByCell had first obtained clearance from the Foreign Investment Promotion Board in 2006 and the Home Ministry too gave security clearance in January 2008.
However, in June 2008, the Home Ministry expressed reservations about the company and in January 2009, withdrew the security clearance.
ByCell’s notice had also said there was a delay on part of Indian government to issue five 2G licences in a timely manner.
The notice said the promoters and their ownership interests in India (ByCell India) are “protected investments” under the Russia-India treaty and Cyprus-India treaty. (PTI)
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