Govt. Mulls Legal Changes to Settle Cairn Tax Issue

India may consider legal changes to create a mechanism to settle the high-profile tax dispute with British energy company Cairn, people aware of discussions told ET.

Talks have been held with Cairn on a possible settlement and, if needed, an amendment may be introduced in the budget, a government official said.

Policymakers are worried about the wider ramifications of prolonged litigation with Cairn in multiple jurisdictions on India overall investment climate at a time when the government is seeking to woo investors.

Cairn said Thursday it had secured a French court’s approval to seize about 20 centrally located properties belonging to the India government valued at more than 20 million euros, triggering urgency on addressing the issue.

“The issues are being legally examined,” said an official. Another said, “If there is need, an amendment can be brought in the budget.”

Cairn has filed cases in multiple jurisdiction to enforce a $ 1.2 billion arbitration award it won in December. The energy company says that sum has grown to $1.7 billion.

One of New Delhi’s key concerns is that the arbitration award by the Permanent Court of Arbitration at The Hague had questioned the sovereign’s right to tax. The government wants this aspect of the judgement addressed prior to any settlement.

“Constructive discussions have been held and the government remains open for an amicable solution open for an amicable solution to the dispute within the country’s legal framework,” the finance ministry said in a statement on Thursday.

A company spokesperson had said, “our strong preference remains an agreed, amicable settlement with the government of India to draw the matter to a close, and to that end we have submitted a detailed series of proposals to them since February this year.” S-ET

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