Axiat Group Berhad and its Nepal subsidiary Ncell have confirmed the ruling from the International Centre for Settlement of Investment Disputes (“ICSID”) in its arbitration case against the Nepali government. The case (No. ARB/19/15) was commenced by Axiata Investments UK Limited (“Axiata UK“), a wholly-owned subsidiary of Axiata, and Ncell Axiata Limited (“Ncell”) against the Federal Democratic Republic of Nepal (“Nepal”).
This Capital Gains Tax (CGT) dispute involves claims under the Agreement dated 2 March 1993 between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Nepal for the Promotion and Protection of Investments (“BIT”) related to Nepal’s conduct towards Ncell (“BIT Arbitration”) in connection with Axiata UK’s acquisition of an indirect 80% shareholding in Ncell in 2016 (the “Transaction“).
The tribunal was constituted by Article 37(2)(b) of the ICSID Convention (“Tribunal”). It presided over the case on 9 June 2023. The tribunal rendered an award dismissing the claims Axiata UK and Ncell made.
The Tribunal has indicated that Nepal should refrain from demanding any further tax, fees, penalties, or interests about the Transaction.
Arising from Nepal’s non-adherence to Tribunal orders during the early stage of the process, Nepal has also been ordered to pay certain sums to Axiata UK and Ncell, a sum of approximately USD1.4 million to Axiata and to reimburse Ncell for the cost of a loan by Ncell. No sums are payable by Axiata UK or Ncell under the Award.
Consulting with legal advisors- Ncell Axiata says on its arbitration case | CGT dispute
Axiata says that it respects the decision of the Tribunal. It adds that the group is consulting its legal advisors about the Award. The telco giant will make further announcements only after “material developments”.
The Group thanks ICSID and all participants in the proceeding and will continue to engage with the Nepal Government constructively.
Axiata and Ncell have remained significant contributors to the socioeconomic development of Nepal. As the country’s largest taxpayer, Ncell contributed NPR 283 billion in taxes and fees till FY 2021/2022 since its inception. Ncell has also played a sound role in employment generation in the country. The private telco, directly and indirectly, supports more than 25,000 jobs and connects over 16 million customers across its networks.
Ncell Axiata’s Corporate Social Responsibility initiatives have it invest over NPR 1.75 billion in various social projects which are critical to the nation. The company has consistently contributed to education, health, and the environment in the country and says it remains fully committed to serving its customers and the people of Nepal.
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