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GS Paper: GS2-19.Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

  • The world cannot ignore the Palestinian question

    The article discusses the types of response the recent violence in the Israel-Palestine conflict would invoke across the world and also explains the perils of ignoring the conflict.

    Three types of responses

    • The deadly riots in Israel and the war in Gaza, is likely to evoke three kinds of responses: The indifferent, the imperial, the humanitarian.

    1) Moral indifference

    •  Instead of becoming the symbol of the unfinished tasks of decolonisation, and a human rights catastrophe, the Palestinian question is now mostly an occasion to vent cynicism.
    • The moral questions the oppression of Palestinians poses is avoided by claiming that in this conflict we can assigning rights and wrongs equally to both sides.
    • There is the spectacle of civilians on both sides living in terror.
    • There is the fanaticism of the right-wing in Israel and there is the fanaticism of Hamas and Fatah.
    • Blaming both sides also whitewashes the fact that there is a monumental injustice to the Palestinians at the heart of the problem.

    2) The imperial response

    • The events leading up to the recent clashes at the Al-Aqsa Mosque can be seen as part of a long pattern of pushing out Palestinians from territory Israel wants to claim.
    • American administration has not been able to significantly roll back this project of pushing the Palestinians out.
    • Palestine will once again be the site where the Biden administration’s liberal internationalism will face challenge.

    3) Humanitarian response

    • This third response is to dig beneath the politics and find bridges in shared humanity and suffering.
    • This is also the tack of the peace movements that use culture and a history of shared suffering to build bridges.
    •  They emphasise that dispossession and exile is something both communities share; they, of all the people, should be able to understand each other.
    •  Humanity and culture, even when deeply internalised, collapse quickly when subject to fear.
    • And they always fall short of acknowledging the core issue at stake: Political equality between two peoples.

    Geopolitical implications of conflict

    • The violence of Israel will beget more terrorist violence of Hamas and Fatah, with every world power from Russia to Iran influencing the chaos.
    • Israel needs to be reminded of the blowback of imperial politics: The ultimate consequence of trying to dominate a people is that you end up destroying the moral legitimacy of your own claims.
    • No amount of military capacity can compensate for the images of lynching, rioting, and provocations that we have seen this week.

    Conclusion

    We continually risk conflict if the Palestinian question is simply treated as an object of geo-political opportunism, not as a question of basic dignity and justice.

  • What does US departure from Afghanistan mean for South Asia?

    The article highlights the important role played by the US in the geopolitics of the region and the impact of the US retreat on the region foreign policy landscape.

    How the US shaped the regional politics of South Asia

    • Since it replaced Britain as the major external power in Greater Middle East half a century ago, America has been the pivot around which the regional politics has played out.
    • Many regional actors sought alliances with America to secure themselves against ambitious or troublesome neighbours.
    • Others sought to balance against America.
    • Israel’s security, ensuring oil supplies, competing with other powers, making regional peace, promoting democracy, and stamping out terrorism are no longer compelling factors demanding massive American military, political and diplomatic investments in the region.

    Region now has to learn to live with neighbours

    • As America steps back from the Middle East, most regional actors either need alternate patrons or reduced tensions with their neighbours.
    • Although China and Russia have regional ambitions, neither of them bring the kind of strategic heft America brought to bear on the Middle East all these decades.
    • Turkey has figured that its troubled economy can’t sustain the ambitious regional policies.
    •  After years of challenging Saudi leadership of the Islamic world, Erdogan is offering an olive branch to Riyadh.
    • After years of intense mutual hostility, Saudi Arabia and Iran are now exploring means to reduce bilateral tensions and moderate their proxy wars in the region.
    • Saudi Arabia is also trying to heal the rift within the Gulf by ending the earlier effort to isolate Qatar. 
    •  These changes come in the wake of the big moves last year by some Arab states — the UAE, Bahrain, Morocco and Sudan — to normalise ties with Israel.

    How India’s approach helped maintain ties in the region

    • India’s emphasis on good relations with all the regional actors without a reference to their conflicts has been vindicated by the turn of events.
    • Barring Turkey, which turned hostile to India under Erdogan, India has managed to expand its ties with most regional actors.
    • Hopefully, the new regional churn will encourage Turkey to take a fresh look at its relations with India.

    Effect on India-Pak relations

    • The regional reset in the Middle East has coincided with efforts by Delhi and Rawalpindi to cool their tensions.
    • The ceasefire on the Line of Control in Kashmir announced at the end of February appears to be holding.
    • The US withdrawal from Afghanistan poses major challenges to the Subcontinent.
    • India and Pakistan, for very different reasons, would have liked to see the US forces stay forever in Afghanistan.
    • For India, American military presence would have kept a check on extremist forces and created conducive conditions for an Indian role in Afghanistan.
    • For Pakistan, American military presence in Afghanistan keeps the US utterly dependent on Pakistan for geographic access and operational support.

    Challenge of terrorism

    • The prospect of trans-border links between the Taliban and other extremist forces in the region is a challenge that South Asian states will have to confront sooner than later.
    • Soaring levels of violence in Afghanistan and attack on the former president of Maldives, underlines South Asia’s enduring challenges with terrorism.
    • Unless the South Asian states collaborate on countering extremism and terrorism, every one of them will be weakened.

    Consider the question “How US troop withdrawal from Afghanistan will influence the regional geopolitics of the region?”

    Conclusion

    The region needs to focus on the peace and harmony in the region while resolving the bilateral issues through dialogue.

  • Israel-Palestine Clash

    Context

    On Monday, Israeli police stormed the Al-Aqsa mosque compound in East Jerusalem, leaving a reported 300 people injured. The stand-off came at the end of a week of tensions over the eviction of Palestinian residents from two neighbourhoods of East Jerusalem, Sheikh Jarrah and Silwan, to make way for Jewish settlers.

    Cause of the clashes

    • The Al-Aqsa is located on a plaza at Temple Mount, which is known in Islam as Haram-e-Sharif.
    • The Mount is also Judaism’s holiest site.
    • The most imposing structure on the compound is the Dome of the Rock, with its golden dome.
    • The Western Wall, also known as the Wailing Wall sacred to Jews, is one side of the retaining wall of the Al-Aqsa compound.
    • Soon after the 1967 Six-Day War ended, Israel gave back to Jordan the administration and management of the Al-Aqsa compound.
    • While non-Muslims have not been allowed to worship at Al-Aqsa, Jewish individuals and groups have made repeated attempts to gain entry to the Mount Temple plaza.
    • Since the late 1990s, around the time of the first intifada, such attempts began occurring with a regularity as Jewish settlers began claiming land in East Jerusalem and surrounding areas.
    • It has led to repeated clashes and tensions at Al-Aqsa.

    Rival claims over Jerusalem

    • Both Israel and Palestine have declared Jerusale their capital.
    • In July 1980, the Israeli Parliament passed the Jerusalem Law declaring it the country’s capital.
    • Palestinians declared Jerusalem the capital of the putative state of Palestine by a law passed by the Palestinian Authority in 2000.
    • The 1988 Palestinian Declaration of Independence also declared Jerusalem as the capital.
    • For the present, the Palestinian Authority has its headquarters in Ramallah.

    How the world is reacting

    • The Security Council held a meeting on the situation in Jerusalem, but did not make any statement immediately.
    • Last Friday, the US said it was “extremely concerned” .
    • The UAE, which recently recognised as Israel as a state and sealed a historic peace agreement to normalise relations with it, has “strongly condemned” the clashes and the planned evictions in Jerusalem over the past week.
    • Saudi Arabia said it “rejects Israel’s plans and measures to evict dozens of Palestinians from their homes in Jerusalem”.
    • Pakistan Prime Minister also condemned Israel for violation of international law.

  • U.S. to support intellectual property waiver for COVID-19 vaccines

    US in support of TRIPS waiver

    • The United States announced its support to an initiative at the World Trade Organisation (WTO) to waive Trade Related Intellectual Property Rights (TRIPS) protection for COVID-19 vaccines.
    • The initiative was first floated by India and South Africa last October.
    • Over a 100 countries have supported the proposal, according to the Associated Press.

    Opposition to the move

    • Among the arguments proffered to retain IP protection are that biotech jobs will be transferred from the U.S. to foreign countries and that waiving IP still not does overcome bottlenecks like manufacturing capacity.
    • Twelve Republican Members of Congress wrote to Mr. Biden on Tuesday urging him to consider other means to increase vaccine access that did not involve weaking IP protections.
    • Weakening protections would hamper American competitiveness and innovation, they said.

  • Iran, U.S. warships engage in a tense encounter

    What happened

    • An American warship fired warning shots when vessels of Iran’s paramilitary Revolutionary Guard came too close to a patrol in the Persian Gulf.
    • Footage released on April 27 by the Navy showed a ship commanded by the Guard cut in front of the USCGC Monomoy.
    • The incidents at sea almost always involve the Revolutionary Guard, which reports only to Supreme Leader Ayatollah Ali Khamenei.

    Context of the nuclear deal

    • Some analysts believe the incidents are meant in part to squeeze President Hassan Rouhani’s administration after the 2015 nuclear deal.
    • The incident comes as Iran negotiates with world powers in Vienna over Tehran and Washington returning to the 2015 nuclear deal.
    • It also follows a series of incidents across the Mideast attributed to a shadow war between Iran and Israel, which includes attacks on regional shipping and sabotage at Iran’s Natanz nuclear facility.

  • An unquiet neighbourhood

    The article highlights the inherent difficulty in finding a solution to the two conflicts raging on in India’s neigbourhood.

    Tale of two conflicts in neighbourhood

    • Efforts to end two major conflicts in India’s neighbourhood have become intense.
    • To the west, a peace summit on Afghanistan, seeking to end decades of conflict there, was also scheduled to take place in Istanbul over the weekend.
    • To the east, the Association of Southeast Asian Nations (ASEAN) has produced a diplomatic opening with Myanmar’s military leadership.
    • Afghan conflict go back to the late 1970s; since then we have seen different phases of the conflict.
    • Although the crisis in Myanmar appears recent, the tension between civil-military relations is not new.
    • Back in 1988, the army annulled the huge mandate won by Aung San Suu Kyi and unleashed massive repression.

    3 Common Themes in the effort at peace and reconciliation

    1) Ending violence

    • The first is about ending violence.
    • In Afghanistan it has been near impossible to get a resurgent Taliban to agree to stop its attacks on government forces or the civilian population.
    • The ASEAN initiative in Myanmar calls for an immediate cessation of violence and utmost restraint from all sides.
    • The opposition demanding restoration of democracy might find this rather ironic, since it is the army that is employing violence and has shown scant restraint.

    2) Dialogue among all parties

    • The second theme in the ASEAN initiative — “constructive dialogue among all parties” to “seek a peaceful solution” — is also common to all peace processes.
    • The Taliban found all kinds of excuses to delay a dialogue with the Kabul government that it always saw as illegitimate. So far, it has avoided one.
    • In Myanmar, the army might be ready to engage the opposition in a prolonged dialogue and defuse international pressure; but it will be hard for the victims of the coup to accept a dialogue on the army’s terms.

    3) Third-party mediator

    • The Afghan conflict has long been internationalised.
    • All major powers, including regional actors and neighbours, have acquired stakes in the way the Afghan conflict is resolved.
    •  This unfortunately makes the construction of an internal settlement that much harder.
    • In Myanmar, the ASEAN has set the ball rolling by agreeing that a special envoy will be traveling to the region and will engage with all parties to the conflict.

    Cost-benefit in diplomacy

    • The US is hoping that the Taliban will moderate some of its hardline positions given its need for significant international economic assistance for reconstruction, political legitimacy.
    • In Myanmar, too, the international community will hope the military would want to avoid the risks of political isolation and economic punishment.
    • But how the Taliban and the Myanmar army calculate these costs and benefits could be very different.
    • Both have long experience of surviving external pressure and enduring sanctions.

    Conclusion

    Few civil wars have seen the kind of massive external effort to change the internal dynamics as in Afghanistan; but to no avail. In Myanmar, it is not clear how far the international community might go. The prospects for positive change in Afghanistan and Myanmar, then, do not look too bright in the near term.

  • What the US’s recognition of killings of Armenians as genocide mean

    What is genocide

    • According to Article II of the UN Convention on Genocide of December 1948, genocide has been described as carrying out acts intended “to destroy, in whole or in part, a national, ethnic, racial or religious group”.

    Why Armenians were targeted

    • In a way, the Armenians were victims of the great power contests of the late 19th and early 20th centuries.
    • The resentment started building up after the Russo-Turkish war of 1877-78 in which the Turks lost territories.
    • In the Treaty of Berlin, big powers dictated terms to the Ottomans, including putting pressure on Sultan Abdülhamid II to initiate reforms “in the provinces inhabited by Armenians, and to guarantee their security against the Circassians and Kurds.”
    • The Sultan saw this as a sign of strengthening ties between the Armenians and other rival countries, especially Russia.
    • Post the treaty, there were a series of attacks on Armenians by Turkish and Kurdish militias.
    • In 1908, the Young Turks wrested control from the Sultan and promised to restore imperial glory.
    • Under the Turks, the empire became more and “Turkik” and persecution against the ethnic minorities picked up.
    • In October 1914, Turkey joined the First World War on the side of Germany.
    • In the Caucasus, they fought the Russians, their primary geopolitical rival.
    • But the Ottomans suffered a catastrophic defeat in the Battle of Sarikamish by the Russians in January 1915.
    • The Turks blamed the defeat on Armenian “treachery”.

    How the killings took place

    • As the War was still waging, the Ottomans feared that Armenians in eastern Anatolia would join the Russians if they advanced into Ottoman territories.
    • First, Armenians in the Ottoman Army were executed.
    • On April 24, the Ottoman government arrested about 250 Armenian intellectuals and community leaders. Most of them were later executed.
    • The Ottoman government passed legislation to deport anyone who is a security risk.
    • Then they moved Armenians, including children, en masse to the Syrian Desert. That was a march of death.
    • Before the First World War broke out in 1914, there were 2 million Armenians in the Ottoman Empire.
    • According to a study by the University of Minnesota’s Center for Holocaust and Genocide Studies, in 1922, four years after the War, the Armenian population in the region was about 387,800.
    • This has led historians to believe that up to 1.5 million Armenians were killed during the course of the War.

    What is Turkey’s response

    • Turkey has acknowledged that atrocities were committed against Armenians, but denies it was a genocide which comes with legal implications.
    • Turkey also challenges the estimates that 1.5 million were killed.
    • The Turkish Foreign Ministry has issued a strong statement to Mr. Biden’s announcement saying it doesn’t not have “a scholarly and legal basis, nor is it supported by any evidence”.
    • Turkey has called on the U.S. President to correct the mistake of recognition as genocide.

  • India’s refugee Policy & Issues with it

    The article highlights the issue of the lack of refugee protection framework in India and suggests enacting domestic law to deal with the issue. 

    India’s record on refugee protection

    • India, for the most part, has had a stellar record on the issue of refugee protection.
    • But this moral tradition has come under great stress of late.
    • New Delhi has been one of the largest recipients of refugees in the world in spite of not being a party to the 1951 Refugee Convention and its 1967 Protocol.

    Confusion in policies for immigrants and refugees

    • Much of the debate in India is about illegal immigrants, not refugees, the two categories tend to get bunched together.
    • Our policies towards illegal immigrants and refugees is confused is because as per Indian law, both categories of people are viewed as one and the same and are covered under the Foreigners Act, 1946.
    • The act offers a simple definition of a foreigner — “foreigner” means “a person who is not a citizen of India”.
    • There are fundamental differences between illegal immigrants and refugees, but India is legally ill-equipped to deal with them separately due to a lack of legal provisions.
    • Also, India is not a party to the 1951 Refugee Convention and its 1967 Protocol, the key legal documents pertaining to refugee protection.

    How absence of policy framework creates problems

    • The absence of legal framework for refugees leads to policy ambiguity whereby India’s refugee policy is guided primarily by ad hocism and ‘political utility’.
    • At the same time, the absence of a legal framework increases the possibility of the domestic politicisation of refugee protection and complicates its geopolitical faultlines.
    • The absence of a clearly laid down refugee protection law also opens the door for geopolitical considerations while deciding to admit refugees or not.
    • For example, India’s decision in the recent case of admitting Myanmarese refugees fleeing to India was influence by the possibility of irking the Generals in Naypyitaw.
    • However, hypothetically speaking, if New Delhi had domestic legislation regarding refugees it could have tempered the expectations of the junta to return the fleeing Myanmarese.

    Why India has not signed convention and protocol on refugee protection

    • The definition of refugees in the 1951 convention only pertains to the violation of civil and political rights, but not economic rights, of individuals.
    • If the violation of economic rights were to be included in the definition of a refugee, it would clearly pose a major burden on the developed world.
    • This argument, if used in the South Asian context, could be a problematic proposition for India too.
    • India also need to argue that the North is violating the convention in both letter and spirit, and make its accession conditional on the Western States rolling back the non-entrée (no entry) regime.
    • The non-entrée regime is constituted by a range of legal and administrative measures that include visa restrictions, carrier sanctions, interdictions, third safe-country rule, restrictive interpretations of the definition of ‘refugee’, withdrawal of social welfare benefits to asylum seekers, and widespread practices of detention.”
    • In other words, India must use its exemplary, though less than perfect, history of refugee protection to begin a global conversation on the issue.

    Way forward

    • What other options do we have to respond to the refugee situation we are faced with?
    • The answer perhaps lies in a new domestic law aimed at refugees.
    • The CAA, however, is not the answer to this problem primarily because of its deeply discriminatory nature.
    • What is perhaps equally important is that such a domestic refugee law should allow for temporary shelter and work permit for refugees.
    • India must also make a distinction between temporary migrant workers, illegal immigrants and refugees and deal with each of them differently through proper legal and institutional mechanisms.

    Consider the question “What are the reasons for India’s not singing 1951 Refugee Convention? What are the options India can explore for refugee protection? 

    Conclusion

    Our traditional practice of managing these issues with ambiguity and political expediency has become deeply counterproductive: It neither protects the refugees nor helps stop illegal immigration into the country.

  • India & NATO

    India has jettisoned many of its foreing policy shibboleths of late, however, avoiding NATO is not one of them. The article suggests engaging NATO to be in sync with the changing geopolitics.

    Why India avoided engagement with NATO in the past

    • India’s real problem is not with NATO, but with Delhi’s difficulty in thinking strategically about Europe.
    • Through the colonial era, Calcutta and Delhi viewed Europe through British eyes.
    • After Independence, Delhi tended to see Europe through the Russian lens.
    • The fall of the Berlin Wall and the collapse of the Soviet Union demanded a fresh approach to Europe.
    • But Delhi could not devote the kind of strategic attention that Europe demanded.
    • The bureaucratisation of the engagement between Delhi and Brussels and the lack of high-level political interest prevented India from taking full advantage of a re-emerging Europe.
    • In the last few years, Delhi has begun to develop an independent European framework, but has some distance to go in consolidating it.

    Ending political neglect of Europe

    • India has certainly sought to end prolonged political neglect of Europe.
    • The deepening maritime partnership with France since 2018 is an example.
    • Joining the Franco-German Alliance for Multilateralism in 2019 is another.
    • India’s first summit with Nordic nations in 2018 was a recognition that Europe is not a monolith but a continent of sub-regions.
    • India’s engagement with Central Europe’s Visegrad Four also highlighted the fact that Europe is not monolith.

    Why India should engage NATO

    • During the Cold War, India’s refusal was premised on its non-alignment.
    • That argument had little justification once the Cold War ended during 1989-91.
    • An India-NATO dialogue would simply mean having regular contact with a military alliance, most of whose members are well-established partners of India.
    • If Delhi is eager to draw a reluctant Russia into discussions on the Indo-Pacific, it makes little sense in avoiding engagement with NATO.
    • If Delhi does military exercises with China and Pakistan — under the rubric of the Shanghai Cooperation Organisation (SCO), why should talking to NATO be anathema?
    • To play any role in the Indo-Pacific, Europe and NATO need partners like India, Australia and Japan.
    • Delhi, in turn, knows that no single power can produce stability and security in the Indo-Pacific.
    • India’s enthusiasm for the Quad is a recognition of the need to build coalitions.
    • A sustained dialogue between India and NATO could facilitate productive exchanges in a range of areas, including terrorism, changing geopolitics; the evolving nature of military conflict, the role of emerging military technologies, and new military doctrines.
    • More broadly, an institutionalised engagement with NATO should make it easier for Delhi to deal with the military establishments of its 30 member states.
    • On a bilateral front, each of the members has much to offer in strengthening India’s national capabilities.

    What about Russia

    • Russia has not made a secret of its allergy to the Quad and Delhi’s growing closeness with Washington.
    • Putting NATO into that mix is unlikely to make much difference.
    • Delhi, in turn, can’t be happy with the deepening ties between Moscow and Beijing.
    • As mature states, India and Russia know they have to insulate their bilateral relationship from the larger structural trends buffeting the world today.
    • Meanwhile, both Russia and China have intensive bilateral engagement with Europe.

    Consider the question “India has to end its prolonged political neglect of Europe and engage a major European institution like NATO. In light of this, examine the factors restraining India’s engagement with the Europe.“

    Conclusion

    India’s continued reluctance to engage a major European institution like NATO will be a stunning case of strategic self-denial and we should avoid it.

  • Explained: The Cairn Tax Dispute

    In December 2020, a three-member tribunal at the Permanent Court of Arbitration in the Netherlands ruled against India in its long-running tax dispute with the U.K.-based oil and gas company Cairn Energy.

    PCA Ruling against India

    • The tribunal ordered India to pay about $1.4 billion to the company.
    • Following this, Cairn Energy has successfully moved courts in five countries, including the US and the UK to recognise its claim as per the arbitration award.
    • The Netherlands, France, and Canada are the other three countries.
    • Such recognition by courts opens the door for Cairn Energy to seize assets of the Indian government in these jurisdictions by way of enforcing its claim, in case the latter doesn’t pay its dues.

    What is the dispute about?

    • The dispute started in early 2014 when Indian tax authorities started questioning Cairn Energy requesting information on the group’s reorganization in the financial year 2006-07.

    Issue over the tax due

    • This escalated, and by 2015, the authorities had sent the company a draft assessment order, assessing in the process that there was a principal tax amount of $1.6 billion that was due.
    • The year in reference, 2006-07, was one in which big corporate changes and developments took place in Cairn Energy.

    Basis of the tax demand: Sale of Shares

    • It was the year in which it not only undertook a corporate reorganization but also floated an Indian subsidiary, Cairn India, which in early 2007 got listed on the Indian Stock Market.
    • Through the corporate reorganization process, Cairn Energy had transferred all of its India assets, which were until then held by nine subsidiaries in various countries, to the newly-formed Cairn India.
    • But the tax authorities claimed that in the process of this reorganization, Cairn Energy had made capital gains worth ₹24,500 crores.
    • This, the department asserted, was the basis of the tax demand.

    Is this case similar to Vodafone’s battle with the government?

    • The Vodafone case in 2007 was triggered by Hong Kong’s Hutchinson Telecommunications’ sale of its stake in India’s Hutchinson Essar to Vodafone based out of the Netherlands.
    • The Hong Kong firm made a capital gain on this, which the Indian tax authorities deemed fit to tax.
    • They held that Vodafone should have withheld the tax, and therefore imposed liability on it.
    • The Supreme Court quashed the taxman’s demand that the sale of shares, in this case, would amount to transfer of a capital asset within the meaning of Section 2(14) of the Indian Income Tax Act”.

    What governs the Sale of Shares?

    • In the Union Budget of 2012, the Income Tax Act, 1961 was amended to make sure that even if a transfer of shares takes place outside India, such a transfer can be taxed.
    • This was done when the value of those shares is based on assets in India. And this was applied retrospectively.

    Cairn won over Retrospection

    • The action against Cairn Energy was based on this move.
    • India lost its arbitration case against Vodafone as well, with the government being asked to fork out around ₹80 crores.

    What happened after the tax claims in the Cairn Energy dispute?

    • After receiving a draft assessment order from the tax authorities, Cairn UK Holdings Ltd. appealed before the Income Tax Appellate Tribunal.
    • The tribunal, while providing the company relief from back-dated interest demands, however, upheld the main tax demand.
    • The company had initiated proceedings of arbitration under the U.K.-India bilateral investment treaty.
    • But during this time, the government sold Cairn’s almost 5% holding and seized dividends totalling ₹1,140 crore due to it from those shareholdings and set off a ₹1,590-crore tax refund against the demand.

    What was the main argument of Cairn Energy during the arbitration?

    • The claimants, Cairn Energy and Cairn UK Holdings argued that till the amendment was made to tax retrospectively in 2012, there was no tax on indirect transfers.
    • Indirect transfers here meant transfer by a non-resident of shares in non-Indian companies which indirectly held assets in India.
    • The application of the 2012 amendments, they alleged, constituted “manifest breaches” of the U.K.-India bilateral investment treaty.

    What was India’s defence during the arbitration?

    • India’s counter to the main charge of Cairn Energy was that its 2006 transactions were taxable irrespective of the 2012 amendments.
    • It argued that “Indian law has long permitted taxation where a transaction has a strong economic nexus with India”.
    • It said even if it is retrospective, it is “valid and binding applying the longstanding constitutional, legislative and legal framework in which the claimants have invested”.

    What did the arbitration tribunal rule?

    • The tribunal said the tax demand violated the U.K.-India bilateral investment treaty.
    • The tribunal said India “failed to accord Cairn Energy’s investments fair and equitable treatment” under the bilateral protection pact it had with the United Kingdom.
    • It also ordered India to compensate Cairn Energy and its subsidiary for “the total harm suffered” as a result of the breaches of the treaty.

    India’s way ahead

    • It has been reported in the media that India will appeal against the tribunal’s decision.
    • If enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests.

    Back2Basics: Permanent Court of Arbitration (PCA)

    • It is an intergovernmental organization located in The Hague, Netherlands.
    • It is not a court in the traditional sense but provides services of arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties.
    • The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade.
    • The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states.
    • The organization is not a United Nations agency, but the PCA is an official United Nations Observer.