Decision on India-Russia investment treaty rests on outcome of two cases: Sistema on 2G

NEW DELHI: Russia’s Sistema JSFC today said it will await outcome of two separate court cases before thinking of using India-Russia bilateral investment treaty (BIT) to seek damages over its cancelled 2G telecom licences.

Sistema held 56.68 per cent in Sistema Shyam TeleServices Ltd (SSTL) that operated the MTS brand of mobile phone services. SSTL had 21 of its 22 licences cancelled in 2012.

Sistema was one of the eight operators whose 2G spectrum allocation and telecom licences were struck down by the Supreme Court in 2012 over alleged irregularities in their allocation. A trial court, last week, acquitted all accused of graft and money laundering charges.

When reached for comments post the verdict of the special court, Moscow-based firm’s press office said Sistema has the right to resort to BIT mechanism but would await outcome of two other court cases.

“Sistema has always tried to find an amicable solution with the Government of India with regard to the spectrum issue, and has never resorted to the BIT mechanism to resolve problems related to its telecom business in India,” it said.

Sistema held 56.68 per cent in Sistema Shyam TeleServices Ltd (SSTL) that operated the MTS brand of mobile phone services. SSTL had 21 of its 22 licences cancelled in 2012.

The India-Russia BIT allows a private investor to initiate dispute arbitration proceedings against the government to protect its investments.

“Indian courts are currently reviewing two legal cases related to SSTL’s spectrum – on spectrum contiguity and on the one-time spectrum charge for the period from cancellation of SSTL licences in 2012 till the auction,” Sistema said.

In the first case, it is contesting levy of Rs 3,500 crore in spectrum contiguity charges for reconfiguring its non-contiguous airwaves into contiguous or ‘continuous’ spectrum in the 800 MHz band.

The telecom tribunal had stayed the demand but it is now before the Supreme Court, with the next hearing in January end.

The second case is related to the levy of a one-time spectrum charge for SSTL owning spectrum over the initial limit of 2.5 MHz in its Rajasthan circle from the time of the firm’s licence cancellation in 2012 till the auction. The case is in the telecom tribunal.

“We have the right to resort to the BIT mechanism, but our final decision will depend on the outcome of the above proceedings,” Sistema said.

The oil-to-telecom conglomerate, however, did not answer detailed queries.