Nearly two months after it won an international arbitration tribunal ruling against the Indian government levying taxes retrospectively, Britain's Cairn Energy Plc Chief Executive Simon Thomson on Thursday met top finance ministry officials in hope of quickly resolving the issue.
"We had aconstructive dialogue and the dialogue is ongoing," Thomson told reporters after meeting Finance Secretary Ajay Bhushan Pandey, CBDT Chairman P C Mody and other tax officials.
He refused to comment on what transpired at the meeting. "I can't comment more on the meeting."
While government officials have hinted at filing an appeal against the December 21 ruling, Cairn shareholders have been pressing the company management to get the USD 1.4 billion the tribunal had ordered India to return.
Thomson had been seeking at a meeting with Finance Minister Nirmala Sitharaman and had even posted a video last week outlining his desire to meet her towards finding a quick resolution.
Cairn has threatened to seize Indian government assets overseas if New Delhi fails to return the value of the shares sold, dividend seized and tax refund withheld by the income tax department to recover part of the tax demand.
The firm has started identifying assets it could seize if the Indian government does not comply with the tribunal order.
Sources have said that these could include airplanes and ships.
Last week, it the filed cases in the US, the UK and the Netherlands courts to register the arbitration award, a prelude to seeking legal seizure of assets.
Cairn's hands have been forced by its shareholders who after waiting patiently for seven years for resolution of the tax issue, now wants action to recover the award. The shareholders include big financial institutions such as BlackRock, Fidelity, Franklin Templeton, Schroders and Aviva.
But, since the 582-page judgment was issued, the government has given no indication about whether it intends to honour the verdict, even though payment was due immediately.
Rather than sit and wait for the government response, Cairn has moved to cover for all eventualities, the sources said.
Before going in for the meeting, Thompson said the arbitration the company initiated against the income tax department slapping a Rs 10,247 crore demand on an internal reorganisation it carried out of the India unit before its listing, had been "going on for some considerable time."
"We are pleased that it has come to an end (and) the award has been granted," he said. "Our shareholders want this to be resolved as quickly as possible and that is why we are here to have a discussion today."
He refused to comment on the government challenging the award, saying the company is looking forward to "a positive resolution."
"We are looking forward to having a discussion with the government, let's see how it goes," he said.
An international tribunal had in December unanimously ruled that India violated its obligations under the UK-India Bilateral Investment Treaty in 2014, when the income tax department slapped a Rs 10,247-crore tax demand using legislation that gave it powers to levy taxes retrospectively.
Soon after seeking Rs 10,247 crore in taxes over alleged capital gains made by the company over a 2006-07 reorganisation of India business before its listing, the tax department seized Cairn's residual 10 per cent stake in Cairn India.
In a ruling Cairn had previously described as "final and binding", the tribunal ordered New Delhi to pay USD 1.2 billion in damages, plus interest and costs, to compensate Cairn for the shares long sold off by the tax department as well as confiscated dividends and withheld tax refunds. This totals USD 1.4 billion.
Last month, Cairn wrote to the government saying its shareholders "expect early resolution, failing which they will expect Cairn to pursue the award in conformity with its rights under the treaty".
The award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place, the letter added.
The letter did not specify the assets that might be seized but it is widely speculated that the targets could include bank accounts as well as mobile and immobile property, including the assets of public sector enterprises such as state-owned Air India, but not diplomatic assets.
If it does happen, India would not be the first country to face seizure of its international assets from an energy company.
In 2018, ConocoPhillips seized products from an oil refinery owned by PDVSA in the Dutch Caribbean after the Venezuelan state-owned oil company failed to honour an international judgment awarding Conoco USD 2 billion in compensation for the expropriation of its assets in 2007.
Earlier this month, Minister of State for Finance Anurag Singh Thakur had told Lok Sabha that the Cairn arbitration award was "under consideration of the government."
Cairn Energy had in 2011, sold Cairn India to mining billionaire Anil Agarwal's Vedanta Group, barring a minor stake of 9.8 per cent. It wanted to sell the residual stake as well but was barred by the I-T department from doing so. The government also froze the payment of dividends by Cairn India to Cairn Energy.
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