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Cairn issue: Govt to appeal against arbitration award

Shishir Sinha New Delhi | Updated on February 19, 2021

It also affirms to challenge other related suits

Within hours of meeting between Finance Secretary Ajay B Pandey and Cairn Energy Chief Executive Office Simon Thomson, Government affirmed that it would not just file an appeal against the arbitration award but also contest other related legal suits.

“The Govt will file an appeal against Cairn Arbitration award soon and will contest its sovereign rights to tax,” a Government source said on Friday. Further, he mentioned that it would also strongly contest other suits filed by Cairn Energy at various other international courts.

 

This is the second arbitration an award where Government will move to the appellate forum. Earlier, the Government appealed against the award given in favour of Vodafone.

The present matter involves an international arbitration tribunal award that favoured the Edinburgh-based company Cairn asking the Indian Government to pay $1.2 billion-plus interest and cost. The company has also moved various courts in different countries such as the US, the UK and the Netherlands to register the arbitration award, a prelude to seeking legal seizure of assets if the Indian Government fails to pay.

To find a way out, Thomson arrived in Delhi intending to meet Finance Minister Nirmala Sitharaman. However, the meeting took place between the Finance Secretary and him. Thomson termed this meeting as constructive. On Friday, the source said that the Government welcomes Cairn’s move to reach out for a resolution. However, “any dispute resolution to be sought by Cairn will have to be within already existing laws,” he said while alleging that Cairn had conducted transactions via tax havens to evade taxes.

 

Earlier, Cairn had said the Government could give its assets overseas if India fails to return the value of the shares sold, dividend seized and tax refund withheld by the Income Tax Department to recover part of the tax demand. The firm has started identifying assets to seize if the Indian Government does not comply with the tribunal order. Cairn’s hands have been forced by its shareholders, who now want action to recover the award after waiting patiently for seven years to resolve the tax issue.

Published on February 19, 2021

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