Courts in five countries, including the United States and the United Kingdom, have given recognition to an arbitration award that asked India to return $1.4 billion (over Rs 10,234 crore) to British oil and gas exploration company Cairn Energy, PTI reported on Monday. The amount includes the arbitration award of $1.2 billion and “significant interest and costs”, according to Cairn Energy.
The development opens up the possibility of Cairn Energy seizing Indian assets in those countries if it does not pay the amount, PTI reported, quoting unidentified officials.
On Sunday, Cairn Energy Chief Executive Officer Simon Thomson said it was time for India “to honour the award”.
“Our shareholders are watching,” Thomson said. “Our shareholders include some of the largest global institutions. They expect India to honour these obligations and quickly bring this matter to 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 will have to do”.
Cairn Energy had moved courts in nine countries to enforce its $1.4 billion arbitration award against India, which the company won after a dispute with the country’s revenue authority over a retrospectively applied capital gains tax. Of these, the December 21 award from a three-member tribunal at the Permanent Court of Arbitration in the Netherlands has been recognised and confirmed by courts in the US, the UK, the Netherlands, Canada and France, according to PTI.
Following the recognition of the award by the courts, Cairn Energy can petition for seizing any Indian government asset such as bank accounts, payments to state-owned entities, airplanes and ships, to recover the amount.
In December, the international arbitration tribunal in The Hague had ruled that India’s demand of Rs 10,247 crore from Cairn in past taxes was not valid. The retrospective tax demand was on alleged short-term capital gains that the company had made when it transferred ownership from Cairn UK Holdings to Cairn India in 2006.
The tribunal had ruled that India’s demand was in breach of an bilateral investment protection pact with the United Kingdom, and told New Delhi to pay $1.2 billion crore as damages to the oil company. In response to the arbitration, India’s finance ministry had said that the government will consider all options, including legal remedies before taking further action on the matter.