Edinburgh-based international oil and gas company Cairn Energy confirmed on Tuesday that the Government of India has appealed a tribunal’s decision to award the Scottish firm $1.2 billion over a tax dispute.
“Cairn confirms that it has received notice that the Government of India has petitioned the Dutch Court of Appeal to set aside the arbitration award dated 21stDecember 2020 issued pursuant to the UK-India Bilateral Investment Treaty which was granted unanimously in favour of Cairn,” said the Edinburgh company.
“Cairn has full confidence in its position.
“As previously advised, Cairn will continue to take all steps necessary in order to protect the interests of its shareholders.”
A Reuters report suggested the petition increases the prospect that Cairn will take aggressive steps to enforce or monetise the award.
It said Cairn could try to seize physical or financial assets held overseas by the Government of India or sell the award to aggressive debt collectors.
Cairn added on Tuesday: “On 23 December 2020, Cairn announced that the tribunal established to rule on its claim against the Government of India (GoI) had found unanimously in Cairn’s favour.
“Cairn’s claim was brought under the terms of the UK-India Bilateral Investment Treaty, the legal seat of the tribunal was the Netherlands and the proceedings were under the registry of the Permanent Court of Arbitration.
“The tribunal ruled unanimously that India had breached its obligations to Cairn under the UK-India Bilateral Investment Treaty and that compensation was due.
“Addressing the jurisdiction of the arbitration, the tribunal ruled that the dispute was within the scope of the Treaty and other relevant legal parameters.
“It further ruled that the application to Cairn of the retrospective tax amendment introduced by the GoI was ‘grossly unfair’ and in breach of the ‘Fair and Equitable Treatment’ standard of the Treaty.”
On March 9, Cairn had said: “Following the unanimous arbitration decision under the UK-India Investment Treaty to award Cairn US$1.2 billion plus interest, we have engaged with the Government of India regarding adherence to the ruling and we are pursuing all avenues to protect our shareholders’ rights to the value of the award.”
Notes to Editors
On 23 December 2020, Cairn announced that the tribunal established to rule on its claim against the Government of India (“GoI”) had found unanimously in Cairn’s favour. Cairn’s claim was brought under the terms of the UK-India Bilateral Investment Treaty (the “Treaty”), the legal seat of the tribunal was the Netherlands and the proceedings were under the registry of the Permanent Court of Arbitration.
The tribunal ruled unanimously that India had breached its obligations to Cairn under the UK-India Bilateral Investment Treaty and that compensation was due.
Addressing the jurisdiction of the arbitration, the tribunal ruled that the dispute was within the scope of the Treaty and other relevant legal parameters. It further ruled that the application to Cairn of the retrospective tax amendment introduced by the GoI was “grossly unfair” and in breach of the “Fair and Equitable Treatment” standard of the Treaty.