India has approached a Dutch court to appeal against an order by an international tribunal, directing the country to pay $1.2 billion (over Rs 8,715 crore) in damages along with other costs to Cairn Energy, in a long-running tax dispute, Reuters reported on Wednesday.
This came days after courts in five countries, including the United States and the United Kingdom, gave recognition to the arbitration award by the Permanent Court of Arbitration at The Hague in December that asked India to return money to British oil and gas exploration company. The court had ruled that the Indian government’s retrospective tax demand on Cairn Energy was “in breach of the guarantee of fair and equitable treatment”, and against the India-United Kingdom bilateral treaty.
The amount includes the arbitration award of $1.2 billion and “significant interest and costs”, according to Cairn Energy.
The Indian government filed the appeal on March 22, as Cairn has begun pulling out all the stops to recover the damages award, including hiring a team of asset recovery experts. It also comes weeks ahead of UK Prime Minister Boris Johnson’s visit to India to build deeper business ties.
Unidentified government officials told Reuters that India has appealed on the grounds that taxation-related matters are not covered in its bilateral investment treaty with the United Kingdom, under which the case was filed. Therefore, the arbitration tribunal does not have the jurisdiction to rule on the matter, New Delhi argued, according to an official.
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Cairn Energy case: Courts in five countries confirm $1.4 billion arbitration against India
Cairn Energy had moved courts in nine countries to enforce its $1.4 billion (Rs 10,247 crore) arbitration award against India. This has been recognised and confirmed by courts in the US, the UK, the Netherlands, Canada and France.
Following the recognition of the award by the courts, Cairn Energy can petition for seizing any Indian government asset such as bank accounts, payments to state-owned entities, airplanes and ships, to recover the amount.
Dennis Hranitzky, head of the sovereign litigation practice at Quinn Emanuel Urquhart & Sullivan, a law firm representing the company, told Reuters, that they “will do everything it takes to recover the full amount of the arbitral award if settlement discussions are not fruitful”.
Cairn has said the money ultimately belongs to its shareholders, which include large investors such as BlackRock, Fidelity and Franklin Templeton. The ramifications of India not honouring the award will “run across the international investment community more widely”, it added.
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