In a major setback, India, three months after losing Vodafone arbitration case, has lost another arbitration case related to a tax dispute to the UK oil major Cairn Energy Plc. The international arbitration tribunal, in a verdict that came on Tuesday night, has asked India to pay Rs 8,000 crore as damages to Cairn.
The winning of the international arbitration case has ended one of the most high-profile disputes in India, Reuters reported, citing sources that India has lost the case. Meanwhile, Cairn has not come out with any official statement on the matter yet.
After the verdict, the government will have to pay the British firm Rs 8,000 crore to reverse the dividend and tax refund it ceased and shares it sold to recover part of the tax demand.
In September, the government had lost a high-profile international tax arbitration case against Vodafone Plc after an international arbitration court ruled the Indian government, seeking Rs 22,100 crore in taxes from telecom giant Vodafone using retrospective legislation, was in "breach of the guarantee of fair and equitable treatment" under the bilateral investment protection pact between India and the Netherlands.
Meanwhile, the government is also planning to challenge the Vodafone arbitration award verdict. The matter is being discussed at the highest level, including with Prime Minister Narendra Modi, and the government may soon go ahead with challenging the award at the Singapore appellate tribunal.