Should Govt intervene in Sovereign risk situations
GMR -Male Airport tussle has come to a close with the Maldives government taking over the airport last week. While GMR and Indian industry bodies have termed the termination of a 25-year contract as unlawful, After all the company has reportedly spent close to $230 million so far.
International law accepts that when it comes to issues like nationalization or reneging on contracts by governments, there is not much the law can do to protect commercial interests.In case of unfair termination, the right way is to go in for international arbitration and seek appropriate compensation for expropriation.
That being so, why should the Indian Government be expected to safeguard global investments made by the Private groups? Or it should do what the British Finance Minister, George Osborne, did by raising the Vodafone tax issue while visiting India, as No sovereign nation likes being lectured to, the risks to future investments from reneging on contracts are for it to independently weigh.