Type: IOCR

Cairn Energy has filed a case in a U.S. district court to enforce a $1.2 billion arbitration award it won in a tax dispute against India. Cairn aims to enforce the award under international arbitration rules, commonly called the New York Convention.

New York Convention

• The Convention on the Recognition and Enforcement of Foreign Arbitral Awards is commonly known as the New York Convention.
• It was adopted by a UN diplomatic conference on 10 June 1958 and entered into force on 7 June 1959.
• It requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states.
• Widely considered the foundational instrument for international arbitration, it applies to arbitrations that are not considered domestic awards in the state where recognition and enforcement are sought.

What was the case?

• The Indian government has lost an international arbitration case to energy giant Cairn Plc over the retrospective levy of taxes and has been asked to pay damages worth $1.2 billion to the UK firm.
• The Permanent Court of Arbitration at The Hague has maintained that the Cairn tax issue is not a tax dispute but a tax-related investment dispute and, hence, it falls under its jurisdiction.
• India’s demand in past taxes, it said, was in breach of fair treatment under the UK-India Bilateral Investment Treaty.

The World Economic Forum (WEF) has announced the launch of an Essential Digital Infrastructure and Services Network (EDISON) Alliance.

The peculiarity of name ‘EDISON Alliance’ creates a hotspot here for prelims.  UPSC may either crate confusion over purpose or parent organization. The alliance is yet to take shape completely; hence there is an ambiguity over its members.

EDISON Alliance

• Geneva-based World Economic Forum (WEF), which describes itself as an international organization for public-private partnership, will serve as the secretariat and platform for the EDISON Alliance.
• A wider group of ‘Champions Leaders’ will advise and support the Alliance, the WEF said while announcing the launch.
• Alliance aims to work towards ensuring global and equitable access to the digital economy.
• Its prime goal is to ensure an unprecedented level of cross-sectoral collaboration between the technology industry and other critical sectors of the economy, according to the WEF.

Why need such an alliance?

• Access to digital technologies has enabled many to work, learn and live during the COVID-19 pandemic.
• However, the pandemic has exposed and exacerbated existing gaps and inequalities in almost half of the global population.
• Some 3.6 billion people, remain offline and broadband services are too expensive for 50 percent of the population in developed countries, the WEF said.
• This hampers access to health, education, and economic inclusion.

Seeking urgent reform of the United Nations Security Council (UNSC), India has highlighted the failure of the Intergovernmental Negotiations (IGN) since 13 years of its establishment.

Note various countries in the various groups.

What is the news?

• India, along with Brazil, Japan and Germany are pressing for urgent reform of the UNSC and for a permanent seat in the reformed 15-member top organ of the world body.
• India has said that the UNSC is finding itself unable to act effectively to address increasingly complex issues of international peace and security.
• The UNSC lacks inclusivity of those who need to be members of the powerful organ of the world body.

What is IGN?

• The Intergovernmental Negotiations framework or IGN is a group of nation-states working within the United Nations to further reform of the UNSC.
• The IGN is composed of several different international organizations, namely:

1. African Union (55 member states)
2. G4 nations (Brazil, Germany, India and Japan)
3. Uniting for Consensus Group (UfC), also known as the “Coffee Club” (it aims to counter the bids for permanent seats proposed by G4 nations, includes Pakistan, Turkey, Canada, Spain and Italy)
4. L69 Group of Developing Countries ( it includes developing countries from Africa, Latin America and the Caribbean, Asia and the Pacific)
5. Arab League (six members: Egypt, Iraq, Jordan, Lebanon, Saudi Arabia, and Syria) and
6. Caribbean Community ( a group of 15 member countries called CARICOM)

The United Kingdom has invited PM Modi to attend the G7 summit that is scheduled to be held in June.

Note the members of G7 and G20. UPSC may puzzle you asking which G20 nation isn’t a member of G7.

G7 Countries

• The G-7 or ‘Group of Seven’ includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
• It is an intergovernmental organisation that was formed in 1975 by the top economies of the time as an informal forum to discuss pressing world issues.
• Initially, it was formed as an effort by the US and its allies to discuss economic issues.
• The G-7 forum now discusses several challenges such as oil prices and many pressing issues such as financial crises, terrorism, arms control, and drug trafficking.
• It does not have a formal constitution or a fixed headquarters. The decisions taken by leaders during annual summits are non-binding.
• Canada joined the group in 1976, and the European Union began attending in 1977.

Evolution of the G-7

• When it started in 1975—with six members, Canada joining a year later—it represented about 70% of the world economy.
• And it was a cozy club for tackling issues such as the response to oil shocks.
• Now it accounts for about 40% of global GDP.
• Since the global financial crisis of 2007-09, it has sometimes been overshadowed by the broader g20.
• The G-7 became the G-8 in 1997 when Russia was invited to join.
• In 2014, Russia was debarred after it took over Crimea.

Significance of G7 for India

• India will get more voice, more influence, and more power by entering the G7.
• After the UN Security Council (UNSC), this is the most influential grouping.
• If the group is expanded it will collectively address the humongous issues created by the Wuhan virus,
• Diplomatically, a seat at the high table could help India further its security and foreign policy interests, especially at the nuclear club and UN Security Council reform as well as protecting its interests in the Indian Ocean.

Back2Basics: The G-20

• The G-20 is a larger group of countries, which also includes G7 members.
• The G-20 was formed in 1999, in response to a felt need to bring more countries on board to address global economic concerns.
• Apart from the G-7 countries, the G-20 comprises Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey.
• Together, the G-20 countries make up around 80% of the world’s economy.
• As opposed to the G-7, which discusses a broad range of issues, deliberations at the G-20 are confined to those concerning the global economy and financial markets.
• India is slated to host a G-20 summit in 2022.