A senior company executive said the company waited for seven years for the verdict and its shareholders needed to know when it would be concluded.
With the Indian government deciding to appeal against an international arbitration award that went against it, Cairn Energy Plc will directly knock at the doors of the Indian government for honouring of the award verdict.
Cairn Energy CEO Simon Thomson would be meeting Union finance minister Nirmala Sitharaman in Delhi next week.
"The arbitration is now finalised and the award has been given and we would request along with others, that the Indian government moves swiftly to adhere to the award that has been given.
"That's important, it's important for our shareholders, who are global financial institutions and who want to see a positive investment climate in India," said Simon Thomson in a video address to all stakeholders.
A senior company executive said the company waited for seven years for the verdict and its shareholders needed to know when it would be concluded.
"I'm sure that in working together with the government, we can swiftly draw this to conclusion, and reassure those investors as to the positive investment climate that India offers,” said Thomson hinting at an amicable solution between the two sides.
Thomson, who would be in India on February 17, in his statement said, "Cairn is a wonderful example of successful investment and partnership in India.
"Over decades we built a legacy business that's generated so far over $20 billion of revenue for the Government of India is also shown massive benefit for the local populations where we operated in Gujarat, in Andhra Pradesh and in Rajasthan."
In a major setback to the Indian government, it lost the international arbitration case to Cairn Plc under the retrospective tax legislation amendment in a verdict that came on December 22.
India was asked to pay damages worth $1.2 billion (Rs 8,842 crore) to the UK oil major.
The verdict came three months after India lost arbitration to Vodafone over the retrospective legislation.
Business Standard reported on Tuesday that India was in talks with senior Dutch lawyers to file an appeal against the Cairn verdict at The Hague in the coming weeks.
The Rs 8,800-crore award will likely be contested on two key grounds — jurisdiction and international public policy.
India is expected to take a stand that the government has the sovereign right of taxation and private individuals cannot decide on that.
The international court of arbitration at The Hague has maintained that the Cairn tax issue is not a tax dispute but a tax related investment dispute.
Hence, it falls under its jurisdiction.
It has ruled that India’s demand in past taxes were in breach of fair treatment under a bilateral investment protection pact.
The case pertains to Rs 24,500 crore tax demand on capital gains made by the oil major in reorganisation of its India business in 2006-07.
The Indian government was asked to pay Cairn Rs 8,842 crore in damages, which include the shares attached by the income tax department in January 2014 and sold in 2018 to partially recover the tax dues.
Cairn Energy had held 4.95 per cent stake in mining major Vedanta Ltd which the Income Tax Department had attached after issuing tax demand to the British company in 2014.
The government has been asked to pay damages at the share value of Rs 330 in 2014 instead of Rs 220-240 per share price on which it was actually sold by the I-T department in 2018 in tranches.
The damages also include Rs 1,590 crore of tax refund due to the British company besides the legal fees.
The tax demand by India was in respect of Cairn UK transferring shares of Cairn India Holdings to Cairn India, as part of an internal group reorganisation in 2006-07.
This gave rise to different interpretations on whether the UK-based company made capital gains, preceding an initial public offering (IPO) of shares by Cairn India.
The I-T department had contended that Cairn UK made a capital gain of Rs 24,503.5 crore.
Before the Cairn India IPO, the India operations of Cairn Energy were owned by a company called Cairn India Holdings-Cayman Island and its subsidiaries.
Cairn India Holdings was a fully owned subsidiary of Cairn UK Holdings, in turn a fully owned subsidiary of Cairn Energy.
At the time of IPO, the ownership of the India assets was transferred from Cairn UK Holdings to a new company, Cairn India.
In 2006, Cairn India acquired the entire share capital of Cairn India Holdings from Cairn UK Holdings.
In exchange, 69 per cent of the shares in Cairn India were issued to Cairn UK Holdings. Hence, Cairn Energy, through Cairn UK Holdings, held 69 per cent in Cairn India.
Later, in 2011, Cairn Energy sold Cairn India to mining billionaire Anil Agarwal’s Vedanta Group, barring a minor stake of 9.8 per cent.
It wanted to sell the residual stake as well but was barred by the I-T department from doing so.
The government also froze payment of dividend by Cairn India to Cairn Energy.
Photograph: Parth Sanyal/Reuters
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