Cairn wants India to pay $1.4 bn, shareholders to seek enforcement
Cairn has already moved courts in the US, UK, Netherlands, Canada, France, Singapore, Japan, UAE and Cayman Islands to get the December 21 international arbitration tribunal award registered and recognised
New Delhi: British oil firm Cairn Energy plc on Sunday said its shareholders, including top financial institutions of the world, expect the use of the company’s “strong powers of enforcement” to recover USD 1.4 billion from the Indian government should it not keep its word of honouring international arbitration tribunal awards on retrospective taxes.
Cairn has already moved courts in the US, UK, Netherlands, Canada, France, Singapore, Japan, UAE and Cayman Islands to get the December 21 international arbitration tribunal award registered and recognised – 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, in case New Delhi does not return the value of the shares seized and sold, dividend confiscated and tax refund stopped to adjust a Rs 10,247 crore tax demand raised using retrospective legislation.
Cairn CEO Simon Thomson, who last month met top finance ministry officials for three straight days over the issue, said the Indian government should keep its word on honouring arbitration awards and return the USD 1.4 billion that an international arbitration tribunal has ordered rescinding a retrospective tax demand.
“Our shareholders are watching,” he said in a Twitter post. “They expect India to honour its obligations and to quickly bring this matter to a conclusion and if India do not do that, and if India delay, then our shareholders expect us to pursue our strong powers of enforcement which we have to do”.
Finance Minister Nirmala Sitharaman had on March 5 indicated the government’s intent to appeal against the award when she said it is her “duty” to appeal in cases where the nation’s sovereign authority to tax is questioned.
Interestingly, the December 21 arbitration award specifically made clear that the basis of the judgment was not a challenge to the 2012 law, which gave the government powers to tax deals retrospectively, or India’s sovereign right to tax.
“The issue at stake is thus not a matter of domestic tax law; it is rather whether the fiscal measures taken by the State, valid or not under its own tax laws, violate international law,” the tribunal had said.
