New Delhi: UK's Cairn Energy Plc on Tuesday said it is taking all necessary actions to access the USD 1.725 billion (Rs 12,600 crore) it was awarded by an international arbitration tribunal after overturning a retroactive tax demand slapped by the Indian government.
"In December last year the tribunal established to rule on our claim against the Government of India found in Cairn's favour and awarded us damages of USD 1.2 billion plus interest and costs," Cairn Energy CEO said at company annual shareholders meeting.
This ruling, he said, is binding and enforceable under international treaty law.
"Whilst India has sought to challenge the basis of the award through set-aside proceedings in the Dutch courts, we remain confident of our position and continue constructive engagement with the Government of India whilst at the same time taking all necessary actions to protect our rights to the award and access the value of it as early as possible," he added.
While he did not elaborate, Cairn had previously threatened to seize overseas assets of state-controlled Indian firms to recover the money due to it.
Background
The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later, it made a huge oil discovery in Rajasthan.
In 2006, it listed its Indian assets on the BSE.
Five years after that, the government passed a retroactive tax law and billed Cairn Rs 10,247 crore plus interest and penalty for the reorganisation tied to the flotation.
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The state then expropriated and liquidated Cairn's remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand.
Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it USD 1.2 billion (over Rs 8,800 crore) plus costs and interest, which totals USD 1.725 billion (Rs 12,600 crore) as of December 2020.
According to reports, the Centre has challenged this award at a court in the Netherlands.
Current status
The UK-based firm has already taken steps to have the arbitration award recognised in nine major jurisdictions such as the US, UK, France, the Netherlands, Singapore and Canada's Quebec province, where Indian sovereign assets have been identified.
According to PTI, the company has also hired asset-tracing firms to investigate the overseas assets that could be seized to recover the amount due.
However, it has not said what it might go after but assets could include Air India's planes, vessels belonging to the Shipping Corporation of India and property owned by state banks.
Meanwhile, officials of the Ministry of Finance held three face-to-face meetings with the then Revenue Secretary Ajay Bhushan Pandey in February and at least one video call with his successor Tarun Bajaj.
Outcomes of these meetings
According to PTI, Cairn had in the meetings offered to forego USD 500 million out of the USD 1.7 billion award and invest that amount in any oil and gas or renewable energy project identified by the Centre after rejecting a government offer to get paid just one-fourth of the award.
It wants the principal of USD 1.2 billion to be paid and is open to re-investing the interest and cost in India.
The Indian government, which appointed one of the three arbitrators on The Hague panel and fully participated in the arbitration proceedings since 2015, wanted Cairn to settle the issue through its now-closed tax dispute resolution scheme, Vivad se Vishwas.The Vivad se Vishwas scheme, which closed on March 31, provided for dropping of tax case if 50 per cent of the demand was paid, which the company rejected, the sources said.
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Even if it were to have agreed to the scheme, the Indian government had to refund about Rs 2,500 crore to the British firm, they said.
The value of shares seized and sold, dividend confiscated and tax refund withheld totalled to over Rs 7,600 crore, which was more than 50 per cent of the Rs 10,247 crore principal tax demand raised, the sources added.
Cairn is of the opinion that the unanimous ruling of the tribunal was enforceable against Indian-owned assets in over 160 countries that have signed and ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
(With PTI Inputs)
