Lawstreet Journal

India Challenges $ 1.2 Billion Cairn Arbitration Award

Lawstreet Journal 25 May 2021 11:54pm

Image courtesy: Lawstreet Journal Business India Challenges $ 1.2 Billion Cairn Arbitration Award

On May 23rd 2021, Sunday, the finance minister said that India has challenged an international arbitration tribunal asking it to return U.S. dollar 1.2 billion to UK’s Cairn Energy Plc on grounds that it had never agreed to arbitrate over a national tax dispute.

The government appointed a judge on the three-member arbitration panel and fully participated in the proceedings against India seeking rupees 10, 247 crore in bank taxes from Cairn, The Mistry said the tribunal improperly exercised jurisdiction over a national tax dispute that the Republic of India has never offered or agreed to arbitrate.

India claimed that it had seized and sold shares of the company in its erstwhile India unit confiscated divided you and withheld tax refunds to recover the tax demand it had levied two years after passing a law in 2012 that gives it powers to levy tax retrospectively.

The said company then invoked arbitration under the India UK bilateral investment treaty. In December 2020 the state company won an award which held the levy of taxes using the 2012 law unfair on the company and the tribunal asked the Government of India to return dollar 1.2 billion and also the cost of interest.

The finance minister said that, “the 2006 reorganization of Cairn’s India business for listing on the local bourses as an abusive tax avoidance scheme that were a gross violation of Indian tax laws, thereby depriving Cairn’s alleged investment of any protection under the India UK bilateral investment treaty.”

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Tagged: Law of Arbitration   International Council for Commercial Arbitration   Cairn Arbitration Award  
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