In a major boost to Cairn Energy, courts in five countries, including the US and the UK, have given recognition to an arbitration award that asked India to return $1.4 billion.
According to experts, this opens the avenue for Cairn to seize Indian assets in those countries if India does not pay the award. Cairn Energy had moved the courts in nine countries to enforce the award against India, which the company won after a dispute over a retrospective capital gains tax.
The December 21 award from the Permanent Court of Arbitration in the Netherlands has been recognised and confirmed by the courts in the US, the UK, the Netherlands, Canada and France and Cairn has started the process registering the award in Singapore, Japan, the UAE and Cayman Islands.
The registration of the award is the first step towards its enforcement, if the award is not paid.
Earlier in February, Cairn India had said that it has 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.
An international arbitration seated in The Hague and constituted under the terms of the UK India Bilateral Investment Treaty has ruled conclusively on the matter and issued a final and binding award in Cairn’s favour, ordering the refund of the value of the assets taken, being $1.2 billion, plus significant interest and costs.
The arbitration also ruled decisively that this matter falls within the jurisdiction of the UK-India Treaty, having heard the arguments from the parties on the subject.
Cairn has enjoyed a long and successful history of operating in India, investing billions of dollars, bringing employment and benefiting local communities.
“The business we created in India has generated more than $20 billion in revenues for the government. 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,” Cairn India said.
“We have had cordial and constructive discussions in Delhi over the last few days with officials from the Ministry of Finance. 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,” it added.
“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. We remain hopeful that an acceptable solution can be found, in order to avoid further prolonging and exacerbating this negative issue for all parties. However, we have also been clear that we must continue to take all necessary steps to protect the interests of our shareholders,” Cairn India said.