Govt files appeal against $1.4-billion Cairn award

India had to take the step to protect its sovereign right after exhausting all efforts to settle the matter amicably, the second official said.

India has filed a “writ of summons” in The Hague, challenging about $1.4-billion arbitration award in favour of UK-based Cairn Energy Plc, two government officials said on Tuesday.

The government had offered executives of Cairn Plc to settle the matter through the ongoing tax amnesty scheme, “Vivad se Vishwas”, last month. (Reuters)

“India had filed a writ of summons earlier this week challenging the arbitration award on the principle that no bilateral investment treaty can challenge the sovereign’s right on matters of taxation,” one official said on condition of anonymity. A writ of summons is the first legal step to notify the defendant that a civil lawsuit has been filed against them.

India had to take the step to protect its sovereign right after exhausting all efforts to settle the matter amicably, the second official said. The government had offered executives of Cairn Plc to settle the matter through the ongoing tax amnesty scheme, “Vivad se Vishwas”, last month.

“India was open for a constructive settlement of tax disputes within the existing legal framework. While Cairn was talking to the government, but chose not to resolve the matter amicably,” the official mentioned above said.

The finance ministry and Cairn Energy Plc did not respond to HT’s queries.

The dispute involves the imposition of retrospective tax, which first involved Vodafone Plc and later Cairn Energy Plc. On September 25, 2020, an international arbitration tribunal in The Hague ruled that the Indian government’s decision to retrospectively amend the Income-Tax Act, 1961 in the 2012-13 budget to impose a tax liability on Vodafone Plc, along with interest and penalties, was not consistent with an investment treaty signed between India and Netherlands.