CAIRN Energy has hit a new snag in India where the country’s Government is refusing to accept defeat in a costly and long-running tax dispute.
Edinburgh-based Cairn was awarded $1.4 billion (£1bn) in December after an international tribunal found in its favour in respect of a dispute with the Government of India that started in 2014.
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However, the company said yesterday that it has been notified that the Indian government has petitioned the Dutch Court of Appeal to set aside the arbitration award.
“Cairn has full confidence in its position,” said the company. “As previously advised, Cairn will continue to take all steps necessary in order to protect the interests of its shareholders.”
Cairn did not elaborate on what steps it might take.
In its annual results announcement earlier his month Cairn noted the award was enforceable against Indian-owned assets in more than 160 countries that have signed and ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
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The company may be able to sell the debt owed by the government to a buyer that would be prepared to take on the risk involved in enforcing the award.
The company’s chief executive Simon Thomson has said Cairn does not require any of the money concerned to be able to fund its growth plans.
He has held out the prospect the company could pay out a large share of any money received from the Indian government to shareholders.
Cairn made big finds in India under its founder Sir Bill Gammell. The tax dispute concerns events leading up to the flotation of the firm’s former subsidiary, Cairn India, in 2007. Cairn has always maintained it paid all taxes due.
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Cairn said in December that the tribunal concerned had ruled unanimously that India had breached its obligations to the company under the UK-India Bilateral Investment Treaty and had awarded it$1.2bn damages plus interest and costs.
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