Cairn Energy Wins $1.2 B Tax Arbitration Case Against Indian Gov't

Aditi Shah and Aftab Ahmed
Wednesday, December 23, 2020

Cairn Energy said on Wednesday it had won an international arbitration case against the Indian government over a tax dispute that had spooked investors concerned about retrospective tax claims on companies.

The tribunal ruled unanimously that India had breached its obligations to Cairn under the U.K.-India Bilateral Investment Treaty and awarded Cairn damages of $1.2 billion-plus interest and costs, the company said in its statement.

This is the second setback for India after losing another international arbitration case in September against Vodafone Plc over a $2 billion retrospective tax dispute.

Cairn took the case to arbitration in 2015 to fight against a demand in 2014 from the Indian tax department for 102 billion rupees ($1.4 billion) in taxes it said were owed on capital gains related to the 2007 listing of its Indian unit.

In 2011, Cairn Energy sold its majority stake in Cairn India to Vedanta Ltd, reducing its stake in the Indian company to about 10%.

The Indian government seized the remaining shares in 2014 after the tax complaint was made, as well as dividends Vedanta owed to Cairn Energy for its holdings in the Indian firm.

In 2018, Cairn Energy said it would write down the value of its investment in Vedanta after Indian tax authorities sold $216 million worth of its shares in the Indian mining company.

The tribunal also ruled that India's claim that Cairn had unlawfully avoided paying tax had no grounds or merit and it must permanently withdraw its tax demand and not seek to recover further dues, a source with direct knowledge of the matter said.

The Indian government did not immediately respond to a request for comment.

Shares in Vedanta rose as much as 5% on Wednesday after sources told Reuters that Cairn had won the arbitration. 

(Reporting by Aditi Shah and Aftab Ahmed; additional reporting by Sachin Ravikumar in Bengaluru; Editing by Tom Hogue and Christian Schmollinger)

Categories: Finance Industry News Activity Asia

Related Stories

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

Fugro Expands Geotechnical Testing Capabilities in Indonesia

UK Firm Secures Exploration Extension for Two Blocks off Vietnam

CNOOC Starts Production at Offshore Field in South China Sea

Aker Solutions, PTAS JV Hooks Brownfield Services Extension off Brunei

CDWE Wraps Up Pin Pile Installation Job for Taiwanese Offshore Wind Farm

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

TPAO, SOCAR and BP to Ink Caspian Sea Oil and Gas Production Deal

Fugro Lands Deepwater Gas Field Job in Southeast Asia

Current News

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com