Nokia has invoked the bilateral investment promotion and protection agreement (BIPA) against India to address dispute regarding tax payments worth Rs 210 billion.

The application for negotiated settlement of the tax dispute by Nokia was filed under the Double Taxation Avoidance Agreement between India and Finland. The BIPA treaty provides for amicable conciliation proceedings and arbitration under local rules and the United Nations Commission on International Trade Law (UNCITRAL).

Earlier, in April 2014, Nokia wrote to the then Indian Prime Minister, Manmohan Singh invoking dispute settlement clause in the India-Finland BIPA treaty to settle the tax row. Under BIPA clauses, if a dispute between the country and the investor cannot be settled amicably within three months, the investor can approach local courts or seek international conciliation under UNCITRAL Conciliation Rules for its resolution.

Further, the aggrieved party can also approach the International Centre for Settlement of Investment Disputes or approach an adhoc arbitral tribunal under the Arbitration Rules of UNCITRAL.

Earlier, Nokia could not sell its Chennai-based mobile manufacturing plant to Microsoft owing to the pending tax dispute with the Income Tax Department of India and the Tamil Nadu government. In April 2014, the company completed sale of its handset business to Microsoft for over $7.2 billion excluding its mobile phone manufacturing plant in India.