POST Online Media Lite Edition


Cairn Energy says treaty claim in India tax dispute progressing

Staff Writer |
Cairn Energy on Monday said its claim under the UK-India Bilateral Investment Treaty in an ongoing tax dispute with the government of India is progressing.

Article continues below

Cairn Energy is seeking full restitution for breaches of the treaty in the tax dispute, as a result of attempts to enforce retrospective tax measures, and "failure to treat the company and its investments fairly and equitably".

Not only is Cairn Energy seeking to resolve the tax dispute in India, but it is also seeking damages equal to the value of its shareholding in Cairn India Ltd at the time it was attached, which it gave at around $1 billion.

Final hearings for this tribunal in the Netherlands are scheduled for January 2018.

Cairn Energy transferred its assets in India into Cairn India back in 2006, and was set to sell an around 10% stake in the business for around $1 billion back in 2014, but was blocked by the Indian government, which then launched an investigation into the asset transfer.

Then, the government of India hit the company with a $3.2 billion bill in unpaid tax and interest. However, Cairn has disputed this as the tax levy was made under a law that was not passed until after the asset transfer was made.

Cairn said on Monday that last Friday the Indian Income Tax Department issued an order to Cairn India - now named Vedanta Ltd following its merger with Vedanta Resources PLC's subsidiary earlier this year - directing it to pay over any sums due to Cairn Energy.

Cairn Energy said the sums due now total $104 million, including historical dividends of $53 million and a further dividend of $51 million following the merger with Vedanta.

What to read next

Cairn Energy found oil offshore Senegal
Cairn Energy delighted with oil flowing from well in Senegal
ČEZ Group takes Bulgaria to international center for settlements