The long-running legal dispute between a Scottish based oil minnow and the state of India over a £1.3 billion tax bill is due to begin its next – and possibly final – hearing next month.
Cairn Energy is seeking full restitution for losses totalling approximately $1.3 billion resulting from India’s alleged expropriation of its investments in India in 2014, and India’s allegedly unfair and inequitable treatment of those investments, due to the imposition of retrospective tax measures.
India’s income tax department has continued to enforce its retrospective tax claim against Cairn Energy whilst the UK-India bilateral treaty arbitration has been ongoing.
To date India has seized dividends due to Cairn from its shareholding in Vedanta Limited totalling approximately $155 million and it has offset a tax rebate of $234 million due to Cairn as a result of overpayment of capital gains tax on a separate matter.
Cairn has now been notified by Indian government that it has sold part of Cairn’s shareholding in VL, realising and seizing proceeds of $216 million. Following this sale, Cairn’s retained holding in VL is now approximately 3%.
All of the written submissions by Cairn and the Government of India have now been made, and the final arbitration hearings are scheduled for two weeks commencing on 20 August 2018 in The Hague.
The court is not expected to issue its final decision until later this year or possibly in early 2019.
10 Jul 2018