The Indian government has lost the arbitration case before the energy giant Cairn and has been asked to pay damages worth 8 billion rupees to the British oil company. The verdict, which came late Tuesday night, is another setback for India, three months after a loss to Vodafone over retrospective legislation.
An international arbitration tribunal reportedly ruled that India’s tax claim was not a valid claim. New Delhi can appeal against the ruling that represents a double blow to the government of Prime Minister Narendra Modi after a similar defeat against Vodafone.
Cairn in March 2015 filed a formal dispute against a lawsuit of more than $ 1.6 billion from the Indian tax department dating back to the 2007 listing of its operation in India. Cairn Energy’s victory will be a second loss for India in international arbitration after Vodafone won a year-long tax dispute with the Indian government in September over a controversial $ 3 billion tax claim.
The Indian government’s 2012 budget retrospectively amended the tax code, granting itself the power to pursue M&A deals until 1962 if the underlying asset was in India, according to reports.
It was previously said that India will have to pay more than Rs 7.5 billion to the power company. This is with respect to the amount that has ceased by denying Cairn its shares of the dividend and income tax department by liquidating the portion of residual shares that the company had in Cairn India after its merger with Vedanta.
India is already evaluating options on its loss in the arbitration case against Vodafone. Options include filing a new law to withdraw the 2012 amendment to resolve its tax dispute with Vodafone after the Permanent Court of Arbitration (CPA) in The Hague ruled in favor of the company.
.
