Lawstreet Journal

India challenges $1.2 billion Cairn Award, denies to have agreed to the arbitration over a ‘national tax dispute’

Lawstreet Journal 2 Jun 2021 10:20pm

Image courtesy: Lawstreet Journal Executive India challenges $1.2 billion Cairn Award, denies to have agreed to the arbitration over a ‘national tax dispute’

India, on May 23rd, 2021, challenged an international arbitration tribunal that has asked it to return $1.2 billion to UK’s Cairn Energy Plc, citing that India had never agreed to arbitrate over a ‘national tax dispute’. 

The finance ministry in the matter said that the tribunal improperly exercised jurisdiction over a national tax dispute that Republic of India never agreed or offered to arbitrate, even though the government appointed a judge on the three-member arbitration panel and fully participated in the proceedings.

The firm invested in the oil and gas sector in India in 1994 and in 2006 made a huge oil discovery in Rajasthan. In 2012, the government passed retroactive tax law and billed Cairn Rs.10,247 crore plus interest under the retroactive law.

India then expropriated and liquidated Cairn’s remaining shares in the Indian entity. It seized and sold shares of the company in its erstwhile India, confiscated dividends due and withheld tax refunds to recover the tax demand that it had levied two years after passing retroactive law.

Cairn, invoking arbitration under India-UK bilateral investment treaty, challenged the action in the Hague before an arbitration tribunal that awarded the company $1.2 billion plus costs and interest as of December 2020.

The tribunal in which Cairn filed his challenged consisting three judges, one from the company, another from Indian government and a third neutral party presiding officer, unanimously overturned the tax and asked India to return the value of the shares sold, dividend seized and tax refunded withheld,… Continue Reading...


Tagged: Cairn Arbitration Award  
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