Nepal successfully defended against a $422 million investor-state arbitration brought by Malaysian telecommunications conglomerate Axiata, which challenged the imposition of a capital gains tax arising from Axiata’s 2016 acquisition of a majority stake in Nepal’s largest telecommunications provider. Axiata contended that the transaction, structured through offshore entities, fell outside Nepal’s taxing authority and that government officials had assured the company the deal would not be subject to capital gains tax.
The dispute was heard in a one-week international arbitration before a tribunal convened under the auspices of the Permanent Court of Arbitration in The Hague. Nepal argued that the tax was lawfully imposed under domestic law and consistent with its obligations under the applicable bilateral investment treaty. The tribunal ultimately rejected Axiata’s core claims, deferred to prior rulings of Nepal’s Supreme Court upholding the tax, and confirmed that Nepal’s conduct did not violate its treaty obligations. While the tribunal addressed a narrow procedural issue, it dismissed the vast majority of Axiata’s claims, resulting in a decisive victory for Nepal.
DOAR supported Nepal by providing graphics consulting and evidence presentation services tailored to the demands of an international arbitration. Working closely with counsel, DOAR developed clear visual materials to explain the transaction structure, the application of Nepalese tax law, and the treaty framework governing the dispute. DOAR also supported the seamless presentation of documentary and financial evidence, helping the tribunal navigate complex cross-border issues and reinforcing Nepal’s position that the tax was both lawful and appropriately applied.
