CAIRN Energy is this morning toasting victory in its long-running tax dispute with India, sending its share price soaring nearly 30 per cent and paving the way for hefty pay-outs to investors.

The Edinburgh-based oil and gas company has been awarded damages of $1.2 billion (£890 million), plus interest and costs, with the conclusion of a battle with the Indian government that stretches back to 2014. That was when Cairn was hit with a $1.6bn tax claim, relating to events leading up to an initial public offering of shares in the company’s former subsidiary in India in 2006.

Cairn has maintained throughout that it has paid all taxes due in India, and submitted a claim for more than $1.4bn in compensation from the country’s government.

This morning, Cairn announced that the international tribunal in the Netherlands established to rule on its claim, brought under the terms of the UK-India Bilateral Investment Treaty, had settled in its favour.

The tribunal ruled unanimously that India had breached its obligations to Cairn under the UK-India Bilateral Investment Treaty and has awarded to Cairn damages of $1.2bn plus interest and costs, which now becomes payable.

Cairn’s chief executive Simon Thomson has previously said the company could make significant pay-outs to investors if it won the dispute.

Shares were up 27% at 211.22p in early trading.