Freshfields keeps 32 of 34 spring NQ solicitors

Freshfields and Macfarlanes have confirmed their spring trainee retention scores.

Magic circle player Freshfields is keeping 32 of its 34 rookies — or 94%. None are on fixed term contracts and all will be based in its new London HQ, an ultra-modern skyscraper at 100 Bishopsgate.

Craig Montgomery, training principal and trainee development partner said: “We are delighted to be retaining a very high proportion of our March 2021 qualifying intake. This is a real testament to the strength of the lawyers who have thrived in an unprecedented time. It is also a reflection of our ongoing commitment to recruiting, retaining and developing top talent for the future.”

The firm dishes out around dishes out around 80 training contracts each year, with trainees earning a salary of £45,000 in year one, rising to £51,000 in year two

Freshfields is last of magic circle to reveal its spring score, with Slaughter and Mayand Clifford Chance recording results of 93% and 88%, respectively, and Linklatersand Allen & Overy both posting 92%.

Elsewhere, Macfarlanes has chalked-up a perfect spring retention score of 100%, with all six of its final-seat trainees staying on post-qualification. All are on permanent deals.

The silver circle outfit’s graduate recruitment partner, Jat Bains, commented:

“It’s excellent to have once again retained all of our spring trainee cohort upon qualification. We are pleased that they have chosen to build the next phase of their careers with us. Notwithstanding the pandemic, we take a long-term view, recruiting our trainees to be the partners of the future.”

The NQs will start on a base salary of £85,000 — a five-figure sum that was trimmed by £5,000 last summer (and later reinstated) in response to the coronavirus pandemic. Trainee pay currently sits at £44,000 in year one and £49,000 in year two.

Last summer Macs announced it was upping its training contract offering slightly, from 31 to 33, to accommodate future growth.


Vietnam’s Solar Industry: Bright Prospects for Investors

Vietnam’s golden era for solar development

In June 2020, Sharp Energy Solutions Corporation (SESJ) completed a mega solar power plant in Ninh Thuan province, which is expected to generate 76,373 megawatt hour (MWh) per year. The plant is the newest addition to SESJ’s five other existing solar power plants in Vietnam.

Sharp is only one of the many companies that cashed in on Vietnam’s hunger for renewable power by investing in large-scale solar power projects. As the country bounces back from the pandemic-induced downturn, its energy demand is expected to rise by over 9 percent from 2021 in the next decade. The Ministry of Industry and Trade (MoIT) in a draft report forecast that Vietnam will need about US$128.3 billion of investment to develop its electricity industry in the 2021-2030 period.

For years, Vietnam like many other developing countries relied on coal as the cheapest and easiest option to meet energy needs. However, technological progress and growing environmental concerns have made renewable energies more attractive. In 2017, solar energy played almost no part in Vietnam’s energy strategy. By the end of 2019, Vietnam surpassed Malaysia and Thailand to reach the largest installed capacity of solar panels in Southeast Asia. The country found itself with 5 gigawatts (GW) of photovoltaic projects, far exceeding the 1 GW by 2020 target.

The following article takes a look at Vietnam’s recent solar boom and the future trajectory of solar energy development in the country.

FiT approved in the midst of uncertainty

Much of Vietnam’s recent success with solar energy can be attributed to feed-in-tariffs (FiT). FiTs encourage investment in renewable energy by guaranteeing an above-market price for producers. Since they usually involve long-term contracts, FITs help mitigate the risks inherent in renewable energy production.

In April 2020, the Vietnamese government finalized new solar FiTs, ten months after the previous FiT program expired in June 2019. The new tariffs are 10-24 percent lower than before and are still uniform across regions but differentiated by type (ground-mounted, floating, and rooftop).

Under the new decision, solar projects were required to achieve commercial operation by December 31, 2020, to benefit from the new FiT rates. The delay in the government’s approval gave solar developers a very narrow time frame to work with.

With the current supply chain disruptions affecting solar cells and module delivery from China, and other pandemic-induced economic uncertainties, it was very challenging for firms to become operational before the deadline. Thus, advisory firms like FitchSolutions expect that the new FiT scheme will not be the main driver of investments in solar energy in Vietnam.

Looking forward, Vietnam still intends to implement an auction mechanism in the future. All projects who do not qualify for the new FIT rates will go through a competitive bidding process. By giving the government the ability to issue a call for tenders and select the most price-competitive firms, the scheme will help better manage clean energy development across the country.

However, a transition away from a FiT scheme may take longer than expected given that undeveloped large-scale photovoltaic projects were just approved to receive tariffs. Attracting investment will largely depend on the government’s ability to deliver a clear auction scheme and other incentives on time.

Long-term commitment to boost solar energy

The revised FiT came shortly after the Vietnamese government announced that it intends to double its power generation capacity over the next decade. This will increase the proportion of renewable energy to 20 percent in an attempt to reduce reliance on coal for electricity production.

In late 2019, the Prime Minister approved the outline of the national Power Development Plan (PDP) VIII, expected to be completed sometime in 2021. The PDP VIII covers the period of 2021 to 2030 with a vision to 2045 and sets out renewable energy development and investment attraction as two of the key priorities.

The draft PDP forecasts that by 2030, Vietnam’s electricity sources could reach 132.2 GW with 27 percent from coal-fired plants, 21 percent from gas thermal power, 18 percent from hydroelectricity, 29 percent from wind, solar, and renewable energy, and four percent from other imported sources.

The plan encourages the development of renewable energy and discourages hydroelectricity. Renewables made up 13 percent of power in 2020 but the aim is to make it 30 percent by 2030. This is an ambitious goal but reflects the government’s push to switch to renewables.

In addition to developing the PDP VIII, the MOIT also submitted Proposal No.544/TTr-BCT on January 21, 2020, which outlines a pilot program on direct power purchase agreement (DPPA) mechanisms.

The DPPA program would allow energy producers to sell and deliver electricity to corporate consumers instead of going through a state-owned electric utility company. The proposal sets a two-year timeframe for implementing the pilot program and lays out the criteria for participating developers and private power consumers. It is expected to range between 400-1000 megawatts (MW) and will be available nationwide.

Despite some criticism of the DPPA’s limited scope, the proposal is a positive development for the growth of renewables in Vietnam. It signals that Vietnam is a serious solar player that is willing to implement supportive mechanisms to retain investor interest in the renewable energy sector.

Investors will have to contend with other challenges

Beyond the uncertainties over future investment schemes, there are other factors that both investors and government authorities need to consider as Vietnam moves forward with solar energy development.

First, there are some infrastructure shortcomings that hinder energy transmission. Most solar power plants are concentrated in the sunny southern region, where they tend to overwhelm the national grid. Meanwhile, some solar plants have seen their operation date delayed due to incomplete transmission lines.

The government has proposed to develop the power transmission system and source power from central, south-central, north-central, and central regions. It also stated to apply the research of a smart grid system and use Industry 4.0 technology to optimize transmission systems.

Bringing energy to economic centers and northern cities is, therefore, still a challenge. The new PDP aims to address this by ensuring that energy development is balanced among the regions, and that power grids are connected within Vietnam and with neighboring countries as well.

Further, ground-mounted solar projects need to consider land rights, an issue that looms large in Vietnam. Though investors can benefit from exemptions from land-use fees and rents, administrative processes can take time and cause significant delays.

There are still uncertainties regarding the future of coal. While the PDP VIII emphasizes sustainable development to address climate change, Vietnam’s coal imports in the first half of 2020 surged by 53.8 percent from a year earlier, a record high. According to the MOIT, coal-fired plants account for around 35 percent of Vietnam’s power generation capacity.

The ministry expects that the country will face severe power shortages as the construction of new power plans fall behind the fast-growing demand for energy. Thus, coal may continue to fill the energy gap in the upcoming years.

However, there are signs of dwindling interest for coal. The majority of planned coal power capacity has been delayed or postponed. Though alleged corruption and engineering difficulties partly explain these delays, local opposition and a global movement away from coal power are also major contributing factors.

For example, South Korean and Japanese lenders have pulled back their investment in coal power projects, while Chinese companies are becoming more aware of the risks of continuing to invest in coal. Most recently, Mitsubishi Corp in February pulled out of a coal-fired power plant in Central Vietnam due to international concern about the environmental impact of coal.

Nevertheless, with proper strategic planning and increased support for investment, Vietnam can leverage the opportunities provided by the solar boom and cement its position as a renewables leader in Southeast Asia.


Alberto Vettoretti Managing Partner, Dezan Shira & Associates


Foreign business taxation in Spain: the importance of diagnosis

Setting up a business in Spain is a real adventure which can be really successful. During the process many issues must be taken in consideration; they can discourage the bravest entrepreneur. Which legal figure is the best for my business? Will I be able to keep on living in my own country? How can I recruit Spanish staff? And so on… In our latest posts we have tried to answer all the questions that are surely hovering over your head. Today we are going to focus on one of the most important issues for any foreign entrepreneur who comes to our country: how to manage and understand foreign business taxation in Spain.

The taxation issue includes all the taxes and fees you must pay in order to do business in Spain. But what you probably do not know is that everything can be much easier than it first appears and that you could even avoid paying certain taxes if you do things right. And one of the most important steps you must take is precisely the one we are going to deal with in this post: to carry out a good diagnosis of the business situation, including its special features and activities. If you want to know how to manage (right) your foreign business taxation in Spain, keep on reading!

How to carry out a diagnosis in order to improve your foreign business taxation in Spain

When you see the doctor, he or she will make a thorough examination of our physical condition and will ask many questions concerning your lifestyle and health status. When talking about businesses, the procedure is similar. In order to “prevent diseases”, first is essential to conduct a complete review of the company and examine its condition deeply. As a foreign entrepreneur wishing to set up a business in Spain, the first step to carry out a reliable diagnosis is hiring a specialized legal and tax consultancy in Spain. Do not forget to make sure that all the professionals who advise you speak good English: the issue of foreign business taxation in Spain is delicate and complex, and it is very important for you to understand all the procedures perfectly.

Secondly, the consultancy will use the gathered information to conduct a previous analysis in order to establish the tax obligations your business will have to pay in our country. As a foreign entrepreneur, you could think that the only way to do business in Spain is having a Permanent Establishment: a branch or a subsidiary company. If you want your business to work under this figure there is no problem, but you will have to pay the VAT to the Spanish Tax Agency. First you will probably have to file this tax quarterly; at the end of the year you will have to file the annual tax return. As for the Corporate Tax, it is a yearly tax and the companies must make three payments on account (in April, October and December).

Watch out! It is no good to be in a hurry: before choosing this figure, get some professional advice. Depending of your business’s activity and modus operandi, there is a chance that you could keep a Non-Permanent Establishment in Spain: this legal figure has some advantages that might be of your interest.

Tax analysis and Double Taxation Conventions

When preparing the tax analysis essential to start doing business in Spain, the consultancy will have to determine the type of establishment you want to operate with. As stated before, foreign business taxation in Spain can be quite different depending on this issue. According to the Spanish Tax Agency, a foreign businessman or woman will be operating under a permanent establishment in our country when he or she has some workplace of any kind in which the whole business activity or part of it is conducted, or operates in such workplace through a duly authorized representative. That is, if your company has a fixed business workspace through which the business activity is conducted.

Once determined this issue, the study of foreign business taxation in Spain will be carried out according to the EEC regulatory standards. On the basis of this study and the Double Taxation Conventions, the experts will conduct an exhaustive analysis aiming to prevent to pay the Corporate Tax in Spain. These conventions are international agreements designed to avoid a double taxation; that means, so your company does not pay taxes twice (in Spain and in your country). You can see the list of countries Spain has agreements with in the Spanish Tax Agency official website.

What happens with the VAT?

As well as the Corporate tax, when talking about foreign business taxation in Spain we must also include another heavyweight: the VAT. If you are a non-resident you have the option of filing the corresponding form (360 or 361) in order to pay the tax in our country and reclaim the input tax later. Mind you, remember that you will have to pay it in your country! On the other hand, this tax is regulated by the Double Taxation Conventions: your advisors will be in charge of requesting information about the percentage you must pay. Maybe you will not have to pay anything; then, it will be enough to inform the authorities about your business activity.

It is always better in good company!

In Spain we have a saying: “Better alone than in bad company”. In this case, the most important thing (given that you are setting up a business in Spain as a foreign entrepreneur) is to be always in the best company. In LEIALTA we put our team on your disposal; they are specialized in assisting foreign entrepreneurs who wish to start new projects in our country. Our professionals are specialized in different areas and we also provide you with cash handling services, a NIF to operate with from the very first moment and constant and fluid communication in English. For us, foreign business taxation in Spain has no secrets: our satisfied customers back us up.

Do you want to know more about foreign business taxation in Spain? Do you have any doubts or comments about the subject? Leave your comment… And do not miss our next posts!


Javier Martinez Partner, LEIALTA


Introduction of AllThings IP

“We are happy to announce the launch of our YouTube Channel “Eshwars”. This initiative has been backed by our team’s passion and philosophy to share our firm’s collective knowledge on select legal topics concerning various business laws prevailing in India. The constant support and encouragement of our clients has indeed been our inspiration behind creation of this knowledge video series.

As a start to the knowledge video series, we have come up with our IP specific knowledge videos titled – AllThings IP to address some of the basic and frequently asked questions with respect to IP prosecution and registration in India. We sincerely hope you will find the videos useful. We also request you to subscribe to our Eshwars YouTube channel to receive regular updates.

In case of any queries, feel free to write us at:

Investment Arbitration and India: 2020 Year in Review

For the Indian foreign direct investment landscape, 2020 was a mixed bag of equity inflows, policy changes, arbitration awards and innovative dispute resolution strategies. In September 2020, FDI equity inflows in India crossed the USD 500 billion milestone, computed over a period of 20 years starting from April 2000.1 While global FDI witnessed a steep decline of 42%, India noted a 13% increase in FDI inflows.2 India’s tightened scrutiny of FDI from her neighbours and FDI in e-commerce invited intense discussion.

However, the culmination of key long-standing arbitration proceedings initiated by foreign investors against India under international investment treaties invited global attention, especially in the final quarter of 2020. These disputes were initiated by foreign investors to challenge measures adopted by the Indian government and State entities that adversely impacted foreign investments.

We have extensively covered these developments in the past year. This article serves as a summary, and seeks to cater to (a) foreign direct investors who have made investments into India, and are anticipating or facing measures from the Indian government that could affect the value of their original investment; (b) Indian investors making direct investments abroad, and are facing adverse measures from foreign governments; and (c) State entities engaging in contracts with foreign investors and adopting investment related measures.

Perhaps an analysis of the year-round developments in India in 2020 could be instrumental in tailoring strategies and approach to potential disputes between foreign investors and the Indian government. For our analysis titled ‘Investment Arbitration and India: 2019 Year in Review’, please see here.

FDI Inflows and Outflows

In September 2020, FDI equity inflows in India crossed the USD 500 billion milestone, computed over a period of 20 years starting from April 2000. More than half of this figure is constituted by FDI inflows during the last five years.

As compared to the FDI inflows between April 2019 and September 2019, FDI inflows between April 2020 and September 2020 rose by 15%, escalating up to 30 billion dollars.3 During this period, Singapore remained the highest investing country into India, with an investment of USD 8.30 billion, followed by the United States at USD 7.12 billion, Cayman Islands at USD 2.10 billion, Mauritius at USD 2 billion, Netherlands at USD 1.49 billion and the UK at USD 1.35 billion. The services sector continued to remain the highest recipient of FDI, followed by computer software and hardware, telecommunication, trading and construction development.4

On the other hand, between April 2020 and November 2020, Corporate India invested USD 12.25 billion overseas, most of which has gone into the company’s wholly owned subsidiaries in countries such as the United States, Singapore and the Netherlands, according to Care Ratings. Of the overall USD 12.25 billion, 76% i.e., USD 9.25 billion, was invested into wholly owned subsidiaries and the remaining USD 3 billion into joint ventures.5

Shift in FDI Policies 

In 2020, there were several key changes to the regulatory framework for FDI in India. In February 2020, the Department for Promotion of Industry and Internal Trade (“DPIIT”) issued a clarification on the FDI policy on Single Brand Retail Trading. It provided that if foreign investment in Single Brand Retaining exceeds 51%, then 30% of the value of the goods procured should be sourced from India. The clarification states that goods sourced from units located in Special Economic Zones (SEZs) in India would also qualify to meet the 30% mandatory criterion of sourcing from India.6

In March 2020, the Cabinet approved the amendment to the FDI Policy to permit FDI in Air India Ltd. by Non-Resident Indians (NRIs) up to 100% under the automatic route.7 In the same month, the Indian Parliament also passed the Mineral Laws (Amendment) Bill, 2020. The amendment provides that companies which do not possess any prior coal mining experience in India and/or have mining experience in other minerals or in other countries may participate in auction of coal/lignite blocks.

In April 2020, the Government of India made government clearance mandatory for all FDI inflows from countries that share land borders with India. The FDI Policy was tightened to prevent any opportunistic takeovers or acquisition of Indian companies due to the COVID-19 pandemic.8 In a subsequent notification, it was stated that a transfer of ownership of any existing entity or future FDI in an entity in India, directly or indirectly, resulting in beneficial ownership falling within this restriction would require mandatory government approval.9 Therefore, investors from India’s neighbouring countries will need to seek Indian government’s approval before taking their investment forward – for the foreseeable future. We have assessed this policy and its ramifications in detail in a post here.10

In September 2020, the DPIIT issued a revision to the FDI Policy in the defence sector. Investment through the automatic route was increased from 49% to 74%. Investment beyond 74% now requires Government approval “wherever it is likely to result in access to modern technology or for other reasons to be recorded.”11

In October 2020, India issued a consolidated FDI policy. The Policy superseded the previous Press Notes, Circulars, etc. and consolidated the same into a single policy.12 In Press Note 4 of 2019, the Government had permitted FDI up to 26% FDI through the Government approval route for entities engaged in uploading/streaming of news and current affairs through digital media. On October 16, 2020, the DPIIT clarified that this decision would apply to (a) digital media entities streaming/uploading news and current affairs on websites, apps or other platforms; (b) news agencies which gather, write and distribute/transmit news, directly or indirectly, to digital media entities and/or news aggregators; and (c) news aggregators, being entities, which using software or web applications, aggregate news content from various sources such as news websites, blogs, podcasts, video blogs, user submitted links, etc. in one location.13

Bilateral Investment Treaty Framework

As per the Indian Department of Economic Affairs website, 69 out of 84 BITs have been shown to be terminated on various dates since 2016.14 Between 2019 and 2021, India has terminated BITs with Turkey, Finland, Serbia (Yugoslavia), Sudan, Bahrain, Saudi Arabia, Bosnia & Herzegovina, Jordan, Mexico, Iceland, Macedonia, Brunei Darussalam, Syrian Arab Republic, Myanmar and Mozambique.15 On January 25, 2020 India signed the Investment Cooperation and Facilitation Treaty with Brazil.16. Several BITs and joint interpretative statements are under discussion such as with Iran, Switzerland, Morocco, Kuwait, Ukraine, UAE, San Marino, Hong Kong, Israel, Mauritius and Oman.

Proposed National Legislatino for Investor-State Disputes 

In January 2020, reports suggested that India is considering enactment of a domestic law for protection of foreign investments in India, with a robust dispute resolution mechanism and unequivocal investment protection guarantees.17 The Finance Ministry has recommended mediation and establishment of special fast-track courts to resolve investor-State disputes. Alternatively, it is also stated to consider vesting jurisdiction with the National Company Law Tribunal (NCLT). We have anticipated and analysed key points emanating from such a legislation here.

Investor-State Disputes in 2020

Four investor-State cases against India came to the limelight in 2020. One was declined on jurisdiction in favour of India,18 two were awarded against India,19 and another case proceeded to recognition of award in the U.S. only to be met with hurdles for enforcement in India.20 For an exhaustive analysis of the Vodafone case and its implications on the rights of foreign investors, please see our case study here.21 For a detailed analysis of the Cairn case, please see our analysis here.

Khadamat v. Saudi Arabia

In early 2018, Khadamat Integrated Solutions Private Limited, an Indian investor, initiated investment arbitration proceedings against Saudi Arabia under the India-Saudi Arabia BIT. The tribunal was constituted in September 2019 under the aegis of the Permanent Court of Arbitration. On February 7, 2020, the tribunal passed an award declining jurisdiction.22 Details of the case are not available in public domain.

Vodafone v. India

In 2007, Hutchinson Telecommunications International Limited (Hutch, a Cayman Islands entity) sold its stake in CGP Investments (another Cayman Islands entity), to Vodafone International Holdings (VIHBV, a Netherlands entity) – for a consideration of 11.1 Billion Dollars. Hutch earned capital gains on this sale to VIHBV. CGP Investments held various underlying subsidiaries in Mauritius. These, along with certain Indian companies, ultimately held 67% stake in Hutchison Essar Ltd. (Hutchinson India, an Indian Company). The Indian revenue authorities considered that VIHBV’s indirect acquisition of shares in Hutchinson India was liable for tax deduction at source under the then existing provisions of the Indian Income Tax Act, 1961. As VIHBV had failed to withhold Indian taxes on payments made to Hutch, a tax demand of 2.1 Billion USD was raised on VIHBV.

VIHBV challenged this demand at various levels of the judiciary. On January 20, 2012, the Supreme Court of India23 discharged VIHBV of tax liability. However, the Indian Parliament over-rode the Supreme Court’s judgment and passed the Finance Act, 2012 which retrospectively amended Indian tax legislations in a manner that brought VIHBV under the tax net.

Aggrieved by the manner of imposition of tax, VIHBV initiated arbitration proceedings against India under the India – Netherlands BIT in April 17, 2012. Documents pertaining to the arbitration are not available in public domain. On January 24, 2017, Vodafone Group Plc., a United Kingdom entity and the parent company of VIHBV, initiated arbitration against India under the India-United Kingdom BIT. Both arbitration proceedings challenged the retrospective amendments of tax legislations by India. Government of India applied for anti-arbitration injunction. On May 7, 2018, the Delhi High Court dismissed a suit filed by Government of India to restrain Vodafone Plc. from continuing arbitration proceedings. Please see our coverage on the aforesaid decision here.

On September 25, 2020, the international arbitral tribunal24 constituted under the India – Netherlands BIT passed an award in favour of VIHBV, reportedly for violation of the fair and equitable treatment standard by India under the treaty. The arbitral tribunal directed India to reimburse legal costs of approximately INR 850 million to Vodafone. The excerpt of the award available in public domain can be found here.

On December 24, 2020, India challenged the award of the international arbitration tribunal in Singapore. The proceedings are pending.

Cairn v. India

Cairn India Holdings Limited (“CIHL”) was incorporated in Jersey in August 2006 as a wholly owned subsidiary of Cairn UK Holdings Limited (“CUHL”), a holding company incorporated in the United Kingdom in June, 2006. Under a share exchange agreement between CUHL and CIHL, the former transferred shares constituting the entire issued share capital of nine subsidiaries of the Cairn group, held directly and indirectly by CUHL, that were engaged in the oil and gas sector in India.

In August 2006, Cairn India Limited (CIL) was incorporated in India as a wholly owned subsidiary of CUHL. In October 2006, CUHL sold shares of CIHL to CIL in an internal group restructuring (the Transaction). This was done by way of a subscription and share purchase agreement, and a share purchase deed, through which shares constituting the entire issued share capital of CIHL were transferred to CIL. The consideration was partly in cash and partly in the form of shares of CIL. CIL then divested 30.5% of its shareholding by way of an Initial Public Offering in India in December 2006. As a result of divesting Approx. 30% of its stake in the Subsidiaries and part of IPO proceeds, CUHL received approximately INR 6101 Crore (approximately USD 931 Million).

In December 2011, UK-based Vedanta Resources Plc (Vedanta UK) acquired 59.9% stake in CIL. In April 2017, CIL merged with Vedanta Ltd. (VL), a subsidiary of Vedanta UK. Under the terms of the merger, Cairn Energy, a subsidiary of Vedanta Resources Plc, received ordinary shares and preference shares in VL in exchange for the residual shareholding of approximately 10% in CIL. As a result, Cairn Energy had a shareholding of approximately 5% in VL along-with an interest in preference shares. As on December 31, 2017, this investment was valued at approximately USD 1.1 billion. A detailed description of the procedural timeline and developments in the matter have been explained in a post here.

In January 2014, the Indian tax Assessing Officer initiated re-assessment proceedings against CUHL under the Indian Income Tax Act, 1961. It sought to apply the retrospective amendments made by India in 2012 to the Transaction. It also restricted CUHL from selling its shareholding of approximately 10% in CIL, which at that time had a market value of approximately USD 1 billion. On March 9, 2015, a draft assessment order was passed against CUHL, assessing a principal tax due on the 2006 Transaction to INR 102 billion (USD 1.6 billion), plus applicable interest and penalties.

On March 10, 2015, Cairn Energy initiated international arbitration proceedings under the India-UK BIT against the aforesaid measures adopted by India. It reportedly sought restitution of the value effectively seized by the Indian Income Tax Department (“ITD”) in and since January 2014.25 Cairn’s principal claims were that the assurance of fair and equitable treatment and protections against expropriation afforded by the Treaty have been breached by the actions of the ITD, which had sought to apply punitive retrospective taxes to historical transactions already closely scrutinised and approved by the Government of India.

Soon thereafter, on March 13, 2015, a draft assessment order was passed by the Assessing Officer (“AO”) against CIL for failure to deduct withholding tax on alleged capital gains arising during 2006 Transaction in the hands of CUHL. The tax demand comprised INR 10247 Crores of tax, and the same amount as interest (approximately USD 3.293 billion). On March 27, 2015, Vedanta UK served a notice of claim against the Government of India under the India-United Kingdom BIT, challenging the tax demand (Vedanta case).

The Treaty proceedings in the Cairn case formally commenced in January 2016. Between 2016 and 2018, the ITD seized and held CUHL’s shares in VL for a value of approximately USD 1 billion. Further aggravating matters, the ITD sold part of CUHL’s shares in VL to recover part of the tax demand, realising and seizing proceeds of USD 216 million. It continued to pursue enforcement of the tax demand against CUHL’s assets in India. These enforcement actions included seizure of dividends due to CUHL worth USD 155 million, and offset of a tax refund of USD 234 million due to CUHL as a result of overpayment of capital gains tax on a separate matter.

Since the ITD attached and seized assets of CUHL to enforce the tax demand, CUHL pleaded before the Tribunal that the effects of the tax assessment should be nullified, and Cairn should receive recompense from India for the loss of value resulting from the attachment of CUHL’s shares in CIL and the withholding of the tax refund, which together total approximately USD 1.3 billion. The reparation sought by CUHL in the arbitration was the monetary value required to restore Cairn to the position it would have enjoyed in 2014 but for the Government of India’s actions in breach of the Treaty.

On December 21, 2020, the arbitral tribunal reportedly ordered the government to desist from seeking the tax, and to return the value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand.26 The excerpt of the award available in public domain can be found here. The full award is available on subscription. It is likely that India will challenge the award in Cairn case as well before the Dutch courts.

Devas v. Antrix

In 2005, Antrix Corporation Ltd. (a wholly owned Government of India Company under the control of the Department of Space) had agreed to build, launch and operate two satellites, and to provide 70 MHz of S-band spectrum to Devas Multimedia Pvt. Ltd. by which Devas would offer hybrid satellite and terrestrial communication services throughout India. In February 2011, Antrix issued a termination notice to Devas, on the basis of a policy decision of the Central Government, citing force majeure. After failed discussions, Devas commenced arbitration proceedings against Antrix in June 2011, under the Rules of Arbitration of the International Chamber of Commerce (“ICC”).

On September 14, 2015, the ICC issued an arbitration award in favour of Devas to the tune of USD 562.5 million. Following the award, there was a slew of litigation in India before the Delhi High Court, Karnataka High Court and the Supreme Court of India over challenge and enforcement of the award.

Devas Multimedia sought execution of the award in several jurisdictions, including the United States. The United States Court stayed the execution proceedings for around a year to allow the parties to settle the matter. The stay was lifted in October 2020, and the United States Court ordered execution of the award in favour of Devas Multimedia. The Court confirmed the award in favour of Devas Multimedia for the entire amount of USD 562.5 million together with pre-award and post-award and post-judgment interest.

Antrix Corporation Limited filed an interlocutory application before the Indian Supreme Court. The issue before the Court was whether the application under Section 34 of the Arbitration and Conciliation Act, 1996 (challenge to an arbitral award) should be heard before the courts in Bangalore or Delhi. The Supreme Court acknowledged that that pending the petition under Section 34, the Court cannot order execution of the award. On the aspect of jurisdiction of courts to hear the application under Section 34, the Supreme Court transferred the application to the Delhi High Court.27

Surprisingly, in early 2021, Antrix Corporation filed a petition before the National Company Law Tribunal, Bengaluru (NCLT), seeking an order for winding up of Devas Multimedia under Indian law. Antrix Corporation contended that the Devas Multimedia was formed for fraudulent and unlawful purpose in its bid to obtain the aforesaid contract from Antrix in 2005, the persons concerned with the formation and management of the company were guilty of fraud, misfeasance and misconduct, and the affairs of were being conducted in a fraudulent manner.

The NCLT admitted the petition on January 19, 2021. It stated that though several proceedings are pending against the award, there was no bar against Antrix to initiate the present proceedings. The NCLT made a prima facie finding that Devas had resorted to various frauds, misfeasance, connivance with officials in obtaining the contract from Antrix in 2005. It was also of the prima facie opinion that incorporation of Devas Multimedia and obtaining a contract in a fraudulent manner within a short time, without having requisite experience, would not justify its continuance on the rolls of the Registrar of Companies in India. The final hearing in the petition is pending.


India’s vision of self-dependence, emphasized during the pandemic, heavily depends on foreign investment.28 The milestones and growth achieved by India on the FDI landscape in 2020, despite the pandemic, is testament to the attractive investment opportunities available for foreign investors in India. The World Investment Report 2020 of the United Nations Conference on Trade and Development (UNCTAD) rightly acknowledged that FDI to India has been on a long-term growth trend and that positive, albeit lower, economic growth in the post pandemic period in India will continue to attract market-seeking investments to the country. As per the latest report by UNCTAD released on January 25, 2021, FDI in India rose by 13% in 2020.

However, on the FDI disputes front, 2020 has served as a stern reminder to India and other States engaging in investment-impacting executive, legislative or judicial measures, to abide by international obligations to foreign investors under BITs. It has also served as a cue to foreign investors to evaluate BITs as a means to protect foreign investment from adverse State measures. These remedies could be available even under terminated BITs, depending on their language.

More particularly, the much discussed cases of Vodafone and Cairn are a stark reminder of limits placed by international law even upon States’ sovereign rights of taxation. Before the award in Cairn case was available on subscription, we had written that it is possible to challenge a State’s blanket defence that tax disputes fell within sovereign taxation authority and therefore fell outside the jurisdiction of BITs. We had explained that in such cases, it is possible to make a case for a tax-related investment dispute covered under a BIT, rather than a pure tax dispute that could be arguably excluded from the BIT.

BITs therefore cover a wide array of disputes emanating from State measures. Initiation of disputes under BITs requires an assessment of pre-initiation issues such as funding arrangements, regulatory framework under Indian law, sector-specific issues, risk insurance, time and costs benefit analysis, pros and cons of arbitration on investors’ relationship with India, alternate remedies to safeguard foreign investment, in-depth analysis of commercial agreements and treaties to find overlaps and best mechanisms to pursue remedies, among others. These issues require thorough evaluation before initiating arbitration under a BIT.

And while the Vodafone and Cairn awards could bolster investor confidence in initiating disputes under against retrospective tax amendments or other government measures, the ultimate destination of any arbitration proceeding is enforcement of the arbitral award. In India, the journey to this destination may not be an easy one. Problems could arise both in terms of the applicable legal regime and the time involved in conducting these proceedings. Navigating this road requires strategy, and exploring effective alternate remedies. The award holder would be required to evaluate options for enforcement of the award, hurdles to enforcement of award in India, enforcement in other countries where State assets can be traced and attached for enforcement, domestic law of the country where enforcement is sought, among others.

The continual termination of BITs appears to take away investor remedies against State measures under international law. However, for a country committed to simplifying business and raising investment, it is a welcome move to propose the enactment of a special legislation to protect foreign investors and resolve investor-State disputes. We hope that legislative protection of foreign investors through robust and transparent processes in India will promote foreign investment and accentuate its economic benefits – namely growth, employment and sustainability.29


Qualcomm Loses fight with EU Antitrust Regulators Over Data

A bid by the computer chip company to limit the information it is required to submit to regulators has ended.

US chipmaker Qualcomm has lost its data dispute with EU antitrust regulators following a ruling from Europe’s top court on Thursday.

The Luxembourg-based Court of Justice of the European Union (CJEU) reaffirmed regulators’ right to see data held by Qualcomm, a move that is likely to strengthen the European Commission’s position in other antitrust investigations.

The case in point has already seen the chipmaker struck with a €242 million fine.

Qualcomm’s legal fight with the EU antitrust watchdog began in 2017 when it was instructed to provide more information relating to a case in which it was accused of predatory pricing in 2009 and 2011 in an attempt to crush UK-based phone software developer Icera.

Qualcomm declined to provide further information, arguing that the regulator’s request exceeded the scope of the investigation. It brought its case to the General Court – the second-highest court in Europe – and lost its challenge in 2019, subsequently appealing to the CJEU.

On Thursday, the CJEU backed the Commission.

“Having regard to the broad powers of investigation conferred on the Commission by Regulation No 1/2003, it is for the Commission to decide whether a particular item of information is necessary to enable it to bring to light an infringement of the competition rules,” court judges said.

The European Commission has already levelled fines of €1.2 billion against Qualcomm relating to this case and another in the past three years, both related to the company’s alleged use of its market power to thwart rival firms.

Qualcomm Is also the subject of a third case from the Commissions, which is investigating whether the chipmaker engaged in anti-competitive behaviour by leveraging its market position in 5G modem chips in the radio frequency chip market.


Trademark Protection for Product Shapes and Containers

American law has long granted trademark protection to the shapes of products and containers. Perhaps the most famous example is the instantly recognizable Coca-Cola bottle, which is almost as important a trademark as the soft drink company’s stylized name logo (Trademark protection for the product shapes and containers should not be confused with the safeguards afforded by design patents).

But in one case, actions taken by two well-known companies brought the concept of product shapes into the headlines.

Zippo Manufacturing Co. announced that it received trademark protection for its cigarette lighters’ distinctive rectangular shape in late 2002. The Pennsylvania manufacturer informed wholesalers and retailers that it intends to take action against merchants found selling lighters designed to mislead consumers by infringing on Zippo’s trademarked shape. The company contends that its authorized distributors and retailers have lost millions of dollars in profits over the years as a result of the sale of copycat products. It demanded that all infringing merchandise be removed from store shelves.

In another claim of trademark protection for a distinctively-shaped product, General Motors Corporation recently filed suit against Avanti Motor Corp., claiming that Avanti’s Studebaker XUV infringes on the distinctive shape of GM’s popular Hummer H2. GM argues that consumers will be confused by the similarity of the design of the two vehicles in violation of trademark law. Avanti responded that the design of the XUV is clearly distinct from that of the H2 and therefore causes no confusion among the buying public.

Traditionally, trademark protection is granted only to products or containers with a shape that is easily recognized by the public. In legal language, a trademark exists if the shape has developed a “secondary meaning” indicating it is associated with the company of origin. Although the above examples might seem to indicate that trademark protection only exists for well-known products or containers that have been around for an extended period of time, business owners should be aware that protection is becoming easier to obtain. Today, a distinctive shape may be seen as worthy of trademark protection after a short period of time on the market.

The implications of trademark law for container and product shapes affect businesses across all sectors of the economy. While manufacturers are protected against copying of their products and containers’ shapes, businesses must also be careful not to copy the design of a competitor’s product. In addition to manufacturers, merchants can be held liable for significant damages for selling merchandise that infringes on another company’s trademark.

Design Patents vs. Trademark

Although product shapes and containers are eligible for protection under trademark law, they may also be protected by a design patent as well. Not surprisingly, the coverage afforded by design patents differs from that provided by trademark law.

Design patents prohibit a third party from making, selling or using a product that infringes on a patented design. There is no requirement that companies show a product or container’s content is in any way similar to that of the protected design. Under trademark law, however, it is necessary to show that the infringing product or container could be confused with that of the company seeking the protection of the law. The buying habits of consumers are crucial in proving trademark infringement occurred.

William H. Shawn Co-Managing Partner, ShawnCoulson

DLA fails in effort to stay €12m negligence claim

A High Court judge has refused international firm DLA Piper’s request to stay a €12m professional negligence claim brought against it by a Russian cruise ship company.

Applying principles of Russian law, David Edwards QC, sitting as a High Court judge, said that an arbitration agreement between Premier Cruises Ltd (PCL) and DLA Piper Russia did not apply retrospectively to the subject of the negligence action.

PCL entered into a contract with a Croatian shipyard, Brodosplit, in June 2013 for the construction and purchase of a cruise liner to be called Volga Dream II. The delivery date was March 2015 and the purchase price was €20m.

The judge said the relationship between the shipyard and PCL deteriorated when, towards the end of 2014, the shipyard sought to postpone the delivery date.

With advice from DLA Russia, under what PCL says was an implied retainer, PCL sent a notice of rescission to the shipyard in April 2015.

The shipyard responded by alleging that PCL did not have a contractual right to terminate the shipbuilding contract and PCL had failed to pay the fifth instalment of the purchase price.

The shipyard said it was rescinding the contract or treating PCL’s notice of rescission as a repudiatory breach, which it accepted, bringing the contract to an end.

DLA Russia then contacted the law firm’s London office and a formal engagement letter was sent to PCL, including an arbitration clause for all disputes and disagreements arising under it.

Hill Dickinson, the shipyard’s solicitors, commenced arbitration proceedings later in 2015 and, following a hearing in London in May 2016, the tribunal ruled that PCL must pay the fifth instalment and compensation. PCL paid the shipyard €4.4m in July 2019.

PCL launched proceedings against DLA Piper for professional negligence in January last year, with separate claims against DLA Russia and DLA UK.

Delivering judgment in Premier Cruises Limited v DLA Piper Rus Limited and another [2021] EWHC 151 (Comm), Mr Edwards said PCL claimed it had been given negligent advice by DLA Russia between December 2014 and April 2015 in relation to the termination provisions of the shipbuilding contract and in drafting the notice of rescission.

PCL’s claim against DLA UK was for negligence from May 2015 in failing to advise PCL of the risks in defending the shipyard’s claims. The damages claimed was “in excess of €12m”.

Mr Edwards said DLA Russia applied for a stay of the claim under section 9 of the Arbitration Act 1996, relying on the dispute resolution section of its engagement letter.

Meanwhile DLA UK, which was not a party to the arbitration agreement, applied for a case management stay.

The judge said that, under section 9(1), a party could apply for a stay “in respect of a matter which under the agreement is to be referred to arbitration”.

He said “matter” had been defined as “any issue which is capable of constituting a dispute or difference which may fall within the scope of an arbitration agreement”.

The question was whether the agreement extended to “advice allegedly given and the work allegedly carried out” by the law firm before the engagement letter and arbitration clause, which was governed by Russian law, came into effect.

The High Court heard expert evidence from two Moscow lawyers on the principles of construction applicable to the arbitration agreement – both managing partners of Russian law firms.

Mr Edwards concluded that “the matter which is the subject of the present proceedings against DLA Russia” was not within the scope of the arbitration agreement. He dismissed DLA Russia’s application for a stay.

The judge also dismissed DLA UK’s application for a case management stay.

CNPLaw Business Guide Series

1. Choosing your business vehicle If you are looking to do business in Singapore, you can choose to set up a business vehicle which comes in different forms, such as a sole proprietorship, a partnership, a business trust or a branch of a foreign company. However, the most common form is a private company limited by shares (“company”). This article focuses on typical considerations for incorporating a company in Singapore. 2. What is a private company limited by shares? A private company limited by shares is a legal entity with up to 50 shareholders whose liability is limited to the amount to be paid up on their respective shares in the company. It has a legal personality separate from its shareholders and directors (who are generally not liable for the company’s debts) and has the capacity to sue or be sued and to hold assets in its own name. 3. Incorporation requirements Below is summary of the key requirements for incorporating a company in Singapore. A. Licences

  • Generally, no licence is required to incorporate a company in Singapore.
  • However, certain business activities may require specific licences or permits to be obtained from relevant government agencies before a company can operate, particularly in regulated industries, such as finance, insurance, import trade, etc. This should be considered before incorporating a company in Singapore.

B. Directors

  • There must be at least 1 local director resident in Singapore (e.g. a Singapore citizen, Singapore permanent resident or a Singapore employment pass holder).
  • An overseas foreigner can be a director, provided that there is at least 1 local director as stated above.
  • A director must be at least 18 years old with full legal capacity and not disqualified from acting as a director (e.g. not an undischarged bankrupt).

C. Shareholders

  • The minimum number of shareholders is 1 and the maximum number of shareholders is 50.
  • A shareholder can be an individual or a legal entity, whether local or foreign.

D. Secretary

  • At least 1 secretary must be appointed within 6 months after the incorporation of the company to maintain the corporate records of the company.
  • A secretary must be a local individual resident in Singapore who is qualified to act as a secretary (e.g. a Singapore lawyer or public accountant).
  • If a company only has 1 director, such director cannot also act as the secretary.

E. Auditors

  • A company must appoint auditors within 3 months after the incorporation of the company, unless it is exempt from audit requirements.
  • A company is exempt from audit requirements if it is:
    • a small company, i.e. it is a private company throughout a particular financial year and satisfies any 2 of the following 3 criteria for each of the past 2 financial years: (A) its revenue does not exceed S$10 million; (B) the value of its total assets does not exceed S$10 million; and (C) it has not more than 50 employees; or
    • part of a small group, i.e. a group that satisfies at least 2 of the above criteria on a consolidated basis for the past 2 financial years.

F. Share capital

  • The minimum number of shares is 1 which can have a paid-up capital as low as S$1 (or in such other major currency, such as US$).
  • The share capital can comprise different classes of shares (e.g. ordinary shares and preference shares).

G. Registered address

  • A company must have a local registered address in Singapore which can be at a commercial property or, if approved under the Home Office Scheme, a private residential property.
  • The registered address must be operational but need not be where the company conducts its activities.

H. Constitution

  • A company must have a constitution (previously known as its memorandum and articles of association).
  • The constitution is a public document which governs the company and can be in the form of the model constitution provided by the Companies Act or customised based on specific requirements.
  • If the shareholders also enter into a private shareholders’ agreement to govern the company, it is recommended that the constitution be amended for consistency with such shareholders’ agreement to avoid conflicting provisions.

3. Other considerations A. Bank account

  • A company can open a corporate bank account in Singapore once it is incorporated.
  • Typically, the banks in Singapore will require face-to-face meetings with the directors for verification purposes.

B. Annual maintenance A company must comply with annual maintenance requirements, including:

  • holding its annual general meeting within 6 months after its financial year end, unless the shareholders resolve to dispense with such requirement;
  • filing its annual return with the Accounting and Corporate Regulatory Authority of Singapore (“ACRA”) within 7 months after its financial year end; and
  • filing its income tax return with the Inland Revenue Authority of Singapore by 30 November every year.

C. Corporate tax

  • Corporate tax in Singapore is levied at a flat rate of 17% on chargeable income (i.e. taxable revenues less deductible expenses).
  • All dividends paid by a company to its shareholders are exempt from taxation.
  • There is no capital gains tax in Singapore.
  • The Tax Exemption Scheme is available for qualifying new start-up companies for their first 3 years of assessment. It provides 75% tax exemption on the company’s first S$100,000 of chargeable income and a further 50% tax exemption on the next S$100,000 of chargeable income. To qualify, a company must be a tax resident and have no more than 20 shareholders with all shareholders being individuals or 1 individual shareholder holding at least 10% of its shares. Property and investment holding companies are not eligible.

4. Incorporation process The incorporation process takes place on ACRA’s BizFile e-portal (“ACRA portal”) which is accessible via a CorpPass or a SingPass issued to local entities or individuals respectively. An overseas foreigner should therefore engage a filing agent registered with ACRA (e.g. a Singapore law firm or accounting firm) to assist with the incorporation process. A. Name reservation

  • The name of a company must be reserved on the ACRA portal before it can be incorporated.
  • The name cannot be identical to the name of an existing business, undesirable (e.g. offensive) or prohibited.
  • The name reservation can usually be completed in 1 day whereby the name will be reserved for up to 120 days.

B. Application

  • The proposed shareholders, directors and secretary must provide and/or sign certain documents to incorporate the company, e.g. the first board resolution, constitution, share certificates, consents to act as director or secretary, copies of valid passports or identity cards, recent proof of address, etc.
  • Based on such documents, the application to incorporate the company can be submitted on the ACRA portal with approval usually granted on the same day.

Disclaimer: This update is provided to you for general information and should not be relied upon as legal advice.

Authors: Ken ChiaHazel HoSylvia Koh and Pearlene Han. Our Practice: Corporate Advisory. Read the article here instead to view the infographic

Eliza Low named Partner at MDP Law

Melbourne, February 8th, 2021 —Eliza Low was promoted to Partner at mdp Law after six months as Special Counsel.

Eliza’s exposure to large scale, multi-jurisdiction deals as a Senior Associate at Baker McKenzie, combined with her extensive corporate law experience, marked a significant expansion of mdp’s legal capabilities when she joined in September 2020. Read more