Days after Cairn Energy CEO Simon Thomson met top Finance Ministry official on the tax arbitration award enforcement, company officials said a number of proposals were discussed with the government to find a ‘mutually acceptable’ swift resolution, and the company would look at investing more in India to reduce its dependency on energy imports if such a resolution occurs.
“We have had cordial and constructive discussions in Delhi over the last few days with officials from the Ministry of Finance… We remain hopeful that an acceptable solution can be found, in order to avoid further prolonging and exacerbating this negative issue for all parties,” said a company official privy to the meetings between top Finance Ministry official Ajay Bhushan Pandey and Mr. Thomson held over the past few days.
In December 2020, a three-member tribunal in the Permanent Court of Arbitrage at The Hague had ruled unanimously against the retrospective tax levied by India on Cairn in 2015, ruling that the tax violated the bilateral investment pact. The tribunal also awarded Cairn $1.2 billion in damages.
The government is considering an appeal against the tribunal’s verdict asserting its sovereign right to levy taxes, while Cairn had warned last month that it is considering taking legal recourse to attach Indian assets in different world capitals, unless the issue is resolved. Since then, Cairn has moved a U.S. district court to enforce the arbitration award.
“The freezing of our assets in 2014 to enforce a retrospective tax measure has been extremely negative for all parties, and we are very keen to be able to put this legacy matter behind us and move forward positively… Notwithstanding and without prejudice to our rights under the international arbitration award, we have discussed a number of proposals with the aim of finding a swift resolution that could be mutually acceptable to the Government of India and the interests of Cairn’s shareholders,” the company official said.
“Assuming such a resolution can be achieved, we look forward to being able to move on to further opportunities to invest in India which continues to import the majority of the energy sources it consumes,” the official added, while stressing that the company would continue to take all necessary steps to protect the interests of its shareholders.