Cairn said it is seeking full restitution for losses totalling more than $1.4 billion resulting from government expropriation of its investments in India in 2014
More than a year after hearings in an arbitration initiated by Cairn Energy against Rs 10,247-crore retrospective tax demand ended, the three-member Arbitral Tribunal has indicated that the award will be further delayed to mid-2020, the British firm said on Monday.
The international tribunal, which had in August last year completed main court hearings in the British company's challenge to the Indian government using retrospective legislation to seek Rs 10,247 crore in taxes, was supposed to give an award by February 2019, but in March it delayed it to 2019-end and now to summer of 2020.
"The Arbitral Tribunal has indicated that whilst it is not yet able to commit to a specific award release date, it expects to be in a position to issue the Award in the summer of 2020," Cairn said in a statement.
No reasons have been given by the tribunal for the delay in award.
Cairn said it is seeking full restitution for losses totalling more than $1.4 billion resulting from government expropriation of its investments in India in 2014.
The company, which gave the country its biggest oil discovery, received a notice from the Income Tax Department in January 2014, requesting information relating to the group re-organisation done in 2006.
Alongside, the department attached the company's near 10 per cent shareholding in its erstwhile subsidiary, Cairn India. In March 2015, the tax department sought Rs 10,247 crore in taxes on alleged capital gains made by the company in the internal reorganisation.
Cairn Energy had in 2010-11 sold Cairn India to Vedanta. Following the merger in April 2017 of Cairn India and Vedanta, the UK firm's shareholding in Cairn India was replaced by a shareholding of about 5 per cent in Vedanta issued together with preference shares.
In addition to attaching its shares in Vedanta, the tax department seized dividends due to it from those shareholdings totaling Rs 1,140 crore and set off a Rs 1,590 crore tax refund against the demand.
Cairn Energy in 2015 initiated an international arbitration to challenge retrospective taxation.
Pending final award, the tax department sold Cairn Energy's shares in Vedanta to recover part of the tax demand.
"Cairn continues to have a high level of confidence in the merits of its claims in the arbitration and is seeking full restitution for losses of more than $1.4 billion," the statement said.
The company said in compliance with direction from the tribunal, it is reproducing in full the text of the panel's communique.
"The Arbitral Tribunal has indicated that it expects to be in a position to issue the Award in the summer of 2020, but has clarified that to avoid any misunderstanding, the Tribunal did not intend firmly to commit to a specific Award-release date, nor is it yet in a position to do so," it said quoting the communique from the tribunal.
Cairn's claim under the UK-India Investment Treaty is for monetary compensation of $1.4 billion, the sum required to reinstate the company to the position it would have been in, but for the actions of the tax department since January 2014.
It had previously stated that the arbitration panel is expected to issue a binding and internationally-enforceable award.
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