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

MODEC and Samsung Team Up to Install Carbon Capture Tech on FPSO

Sapura Energy Nets $720M from Multiple Drilling Services Contracts

US Operator Finds Oil Offshore Vietnam

China’s CNOOC Brings Bohai Sea Oil Field On Stream

ABS Approves Hanwha Ocean’s FPSO Design

Floating LNG Conversion Job Slips Out of Seatrium’s Hands

TotalEnergies Wraps Up Acquisition of SapuraOMV’s Gas Assets

Kuwaiti Oil and Gas Firm Exploring More Opportunities in Indonesia's Natuna Sea

Sunda Energy Closing in on Jack-Up Deal for Chuditch-2 Appraisal Well

Sembcorp Signs 10-Year LNG Supply Contract with Chevron

Current News

Fire at Petronas Gas Pipeline in Malaysia Sends 63 to Hospital

Japan’s ENEOS Xplora, PVEP Ink Deal for Vietnam Offshore Block

CNOOC Makes Major Oil and Gas Discovery in South China Sea

Valeura’s Assets in Gulf of Thailand Remain Operational After Earthquake

Op-Ed: Kazakhstan’s National O&G Firm Positioning Itself as Global Energy Player

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

‘Ultra-Mega’ Offshore Deal for L&T at QatarEnergy LNG’s North Field Gas Scheme

Keel Laying for Wind Flyer Trimaran Crew Boat

MODEC Gets Shell’s Gato do Mato FPSO Ops and Maintenance Job

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