By LE Desk

March 30: British energy major Cairn has confirmed that it has received a notice that the Indian government has petitioned the Dutch Court of Appeal to set aside the December 21, 2020, arbitration award. India had challenged the arbitration tribunal verdict, which was ruled in favour of Cairn, in a court in The Hague last week.

The company said it has full confidence on its position. “As previously advised, Cairn will continue to take all steps necessary to protect the interests of its shareholders,” Cairn said in a statement.

Cairn Energy has also reportedly decided to file lawsuits in the US and other countries to seize overseas assets of the Indian government companies as part of the $1.2 billion award by the international arbitration tribunal, Business Today reported. These are primarily non-diplomatic assets, owned by the Indian government.

The company is aiming for Indian government assets in the US, UK, Canada, France, Singapore, the Netherlands and three other countries. Cairn has already moved courts in these countries to get the December 21 international arbitration tribunal award registered and recognised. This is the first step before it can seek seizure of the Indian government assets such as bank accounts, payments to state-owned entities, aeroplanes and ships in those jurisdictions, if New Delhi does not return Rs 10,247 crore tax demand raised using retrospective legislation.

Notably, the international arbitration tribunal in the Netherlands on December 23, 2020, had overturned India’s demand for Rs 10,247 crore in taxes, while ordering the government to return $1.2 billion in value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand. The tribunal ruled unanimously that India had “breached its obligations” to Cairn under the UK-India Bilateral Investment Treaty and that compensation was due.

Cairn’s claim was brought under the terms of the UK-India Bilateral Investment Treaty, the legal seat of the tribunal was the Netherlands and the proceedings were under the registry of the Permanent Court of Arbitration. The tribunal termed the retrospective tax amendment introduced by the Indian government as “grossly unfair” and in breach of the “fair and equitable treatment” standard of the treaty.

After losing a Supreme Court case against levying tax on capital gains made in the 2007 sale by Hutchison of its India business to Vodafone for USD 11.2 billion, the government had in 2012 enacted legislation that gave it powers to tax such deals retrospectively. Thereafter the tax department said Vodafone should have withheld tax on the deal and issued a notice seeking Rs 11,218 crore, later augmented by Rs 7,900 crore in penalties.

In January 2014, the department assessed that Cairn too made an alleged capital gain on reorganising its India business prior to an IPO in 2006-07 and sought Rs 10,247 crore in taxes. But unlike Vodafone where no enforcement action was taken, it seized and sold Cairn’s residual stake in the India unit, confiscated dividends due from such holding, and stopped tax refund due to it.

https://www.businesstoday.in/current/corporate/cairn-receives-notice-on-india-petition-against-arbitration-award-dutch-court/story/435221.html

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