The attorney general (AG) Goolam E. Vahanvati in his response to the department of telecommunications (DoT) has said that foreign investors affected by cancellation of licences by the Supreme cannot from damages from the Indian government by invoking bilateral trade pacts.

“Under the Constitution, there are separate powers between the legislature, the executive and the judiciary. BIPAs have been entered into by the government. The alleged losses which emanates out of orders passed by the court does not constitute a cause of action against the government”, he said.

Russia’s Sistema JSFC and Norway-based Telenor ASA invoked bilateral pacts seeking damages from Indian for losses on their investments following the apex court’s order.

In June DoT had sought Vahanvati’s opinion on whether the Supreme Court’s decision came under the jurisdiction of bilateral treaties.

“When the government undertakes to encourage favourable conditions for investments, this can only apply to what the government of India can itself do,” Vahanvati wrote to DoT.

 “Further, the fact that investments were in fact made demonstrates the investor considered India to be a favourable destination for investments after assessing the commercial gains and risk involved.”

This can come as a blow to foreign telecom firms such as Sistema, Telenor, Loop Telecom as well as foreign investment funds such as Kaif Investments Mauritius and Capital Global Ltd (investors in Loop Telecom).

On whether foreign entities that invested in domestic companies, whose promoters have been prosecuted on criminal charges, could claim damages he said that the fact that the promoters are being prosecuted under criminal law is certainly a relevant factor with regard to the maintainability of the claim for damages by foreign investors.