Companies

Tax row: Cairn hopeful of 'acceptable solution'

Our Bureau New Delhi | Updated on February 21, 2021 Published on February 21, 2021

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The arbitration ruled decisively that the matter falls within the jurisdiction of the UK-India Treaty, says Cairn.

 

Cairn Plc on Sunday expressed hope that ‘an acceptable solution’ will be reached on the international arbitration award matter. In December, an international tribunal had given an award of $1.2 billion with interest and cost favouring Edinburgh-based energy major.

This comes after the company’s CEO Simon Thomson met with Finance Secretary Ajay B Pandey from February 18, 2021 to February 19, 2021. While on February 18, Thomson had termed his meeting as ‘constructive’, on February 19, the Indian government affirmed that it would appeal against the award. Now, Cairn has come out with a statement.

 

“Notwithstanding and without prejudice to our rights under the international arbitration award, we have discussed several proposals to find a swift resolution that could be mutually acceptable to the Government of India and the interests of Cairn’s shareholders,” the company said

“Assuming such a resolution can be achieved, we look forward to being able to move on to further opportunities to invest in India, which continues to import the majority of the energy sources it consumes. We remain hopeful that an acceptable solution can be found to avoid further prolonging and exacerbating this negative issue for all parties. However, we have also been clear that we must continue to take all necessary steps to protect the interests of our shareholders,” it cautioned.

There has been no indication as to when the Indian government would pay the amount. The company has also moved various courts in different countries such as the United States (US), the United Kingdom (UK) and the Netherlands to register the arbitration award, a prelude to seeking legal seizure of assets if the Indian government fails to pay.

Meanwhile, the company said that it had enjoyed a long and successful history operating in India, investing billions of dollars, bringing employment and benefitting local communities. “The business we created in India has generated more than $20billion in revenues for the government. The freezing of our assets in 2014 to enforce a retrospective tax measure has been extremely negative for all parties, and we are very keen to be able to put this legacy matter behind us and move forward positively,” it said.

The company noted that the arbitration also ruled decisively that this matter falls within the UK-India Treaty jurisdiction, having heard arguments from the parties on that subject. “We have had cordial and constructive discussions in Delhi over the last few days with officials from the Ministry of Finance,” the company said about its meeting with the Indian government.

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Published on February 21, 2021
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