Edinburgh-based Cairn Energy has urged New Delhi to move forward with arbitration proceedings launched by the company, stressing that early resolution and clarity would be the key to reassuring the international investment community that India is able to deal with retrospective tax issues speedily.
“We are doing everything to move the process forward… We would like to move to arbitration so we have clarity in the process,” said CEO Simon Thomson during a conference call on Tuesday as the company unveiled half-year results.
He said that while it was hard to estimate a timeline for arbitration proceedings, the entire process would take a minimum of 18 months. London-listed Cairn Energy launched arbitration proceedings under the UK-India Bilateral Investment Treaty earlier this year, after receiving a tax notice for ₹10,240 crore ($1.6billion) plus interest and penalties from the Indian tax authorities, and was blocked from divesting its stake in Cairn India.
“Cairn will also seek restitution of losses resulting from the attachment of its Cairn India stake since 2014,” the company said on Tuesday.
Cairn said that it had appointed its arbitrator to the international panel and was awaiting the Government of India to name its appointee.
Thomson added the company would hear back from the government following an inter-ministerial meeting involving the law, external affairs and finance ministries that was due to take place on the matter. “We remain clear on strength of our legal position,” he said.
The company was following three strategies: engagement with the government, the arbitration process, and a direct appeal to the tax authority.
On Tuesday, Cairn Energy said it expected to begin drilling operations in Senegal later this year, as it reported a first-half year loss of $230 million in the first half of 2015, from a loss of $62 million during the same period the year before.
The company has booked a $168-million charge relating to impairment and the disposal of the Cairn India investment.