New Delhi, December 23
India has been ordered to return up to $1.4 billion to Cairn Energy PLC of the UK after an international arbitration tribunal in The Hague overturned tax demanded retrospectively, an award the government indicated it may challenge.
The three-member tribunal, also comprising an Indian government nominee, unanimously ruled that India’s claim of Rs 10,247 crore in past taxes over a 2006-07 internal reorganisation of Cairn’s India business was not a valid demand.
India, it said, “failed to accord the claimants’ (Cairn Energy’s) investments fair and equitable treatment” under the bilateral investment protection pact the nation had with the UK, it said in a 582-page order.
The tribunal ordered the government to desist from seeking such a tax and return the value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand.
The government was asked to compensate Cairn “for the total harm suffered” together with interest and cost of arbitration, according to the order.
While the order does not contain a provision for challenge or appeal against the award, the Centre said it will study the arbitration award and “consider all options and take a decision on the further course of action, including legal remedies before appropriate fora.”
Cairn, according to people aware of the matter, could use the arbitration award to approach courts in countries such as the UK to seize any property India has overseas to recover the money if the award is not honoured.
In a statement, Cairn Energy said it had been awarded $1.2 billion damages plus interest and costs. Sources said including $200 million of interest and $22 million of arbitration cost, the total amount payable by the Indian Government is $1.4 billion (about Rs 10,500 crore). — PTI
Govt went ‘Soft’ on Reliance
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India failed to accord fair and equitable treatment to Cairn’s investments… (must compensate it) for the harm the firm suffered. Hague tribunal