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India to file appeal against Cairn's $1.2 billion arbitration award

New Delhi has time till March 21 to file an appeal in accordance with a 90-day window

Topics
Cairn Energy | India | Finance Ministry

Indivjal Dhasmana 

Cairn
The case pertains to the Rs 24,500-crore tax demand on capital gains made by the oil major in reorganising its India business in 2006-07

will file an appeal against the Cairn arbitration award, which it lost, soon and will defend its sovereign rights to tax, sources said, even as Chief Executive Officer Simon Thomson again met Finance Secretary A B Pandey on Friday, seeking a swift enforcement of the more than $1.2-billion award during his meeting with top officials.

Sources said the government would contest other suits filed by at various other international forums.

The energy major has filed a case in the US, the UK, and the Netherlands on executing the December 21 award.

Meanwhile, sources said the government welcomed Cairn’s move to reach out for a resolution and any resolution would have to be within existing laws. They said Cairn had conducted transactions via tax havens to evade taxes.

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New Delhi has time till March 21 to file an appeal in accordance with a 90-day window.


Cairn Energy CEO Simon Thomson

CEO Simon Thomson met Finance Secretary A B Pandey and tax officials for the second time on Friday, seeking a swift enforcement of the arbitration award

Thomson had sought a meeting with Finance Minister Before the meeting with Pandey and other officials on Thursday, Thomson had said the firm’s shareholders wanted the matter to be resolved quickly as the “award has been granted”.

“We are pleased it has come to an end and the award has been granted … Our shareholders want it to be resolved quickly, which is why we’re here,” said Thomson.

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Thomson met Pandey and the ministry officials again on Friday.

The government had lost an international arbitration case to energy giant Cairn Plc under the retrospective tax legislation amendment.

The company had, in a letter to the Centre last month, threatened seizing the government’s assets if New Delhi failed to pay the award.

Cairn had got an order from a Dutch lower court on implementing the award, which would enable the UK firm to identify commercial Indian assets that can be seized, such as aircraft and ships.

The case pertains to the Rs 24,500-crore tax demand on capital gains made by the oil major in reorganising its business in 2006-07.

It also includes reversing dividend as well as tax refund that the government had seized, and shares that the I-T department had sold to recover part of the demand.

had argued, during the Cairn arbitration, that non-compliance with the tax demand was not covered under international treaties and that the amendment to the Finance Act, 2012 (retrospective amendment), was only in the nature of clarification.

The verdict was given by a three-member panel chaired by Laurent Levy. The final hearing was held in Paris in December 2018.

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First Published: Fri, February 19 2021. 10:22 IST
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