The long-running court battle between Edinburgh-based oil minnow Cairn Energy and the state of India over a disputed £50 million tax and $1 billion damages bill is set to continue for at least another six months.
In March this year, Cairn said it had received confirmation from the Government of India via the international arbitration tribunal that dividends of $53 million due from Cairn India Limited were no longer restricted. Cairn plc then requested the immediate release of that sum from Cairn India (subsequently re-named as Vedanta Ltd)
However, on 16 June 2017 the Indian Income Tax Department (IITD) issued an order to Vedanta directing it to pay over any sums due to Cairn. Sums due to Cairn from Vedanta now total $104 million, including historical dividends of $53 million and a further dividend of $51 million after the merger of Cairn India and Vedanta
Notwithstanding this Cairn is seeking full restitution for Treaty breaches resulting from the alleged expropriation of its investments in India in 2014 by attempting to enforce retrospective tax measures and the failure to treat Cairn ‘fairly and equitably’.
A Cairn spokesman said: “We have a high level of confidence in our case under the Treaty and, in addition to resolution of the retrospective tax dispute, we are claiming damages equal to the value of our residual shareholding in Cairn India at the time it was attached (approximately $1 billion).”
The seat of the arbitration is The Hague in the Netherlands and final hearings for the tribunal are scheduled to start in January 2018.