No Proposal from Cairn Energy for Settlement of Tax Dispute: FinMin

The government has not received any proposal from Cairn Energy for a solution to the tax dispute within the country’s legal framework, minister of state for finance Pankaj Chaudhary told the Lok Sabha on Monday.

The finance ministry acknowledged that an order has been passed by a French court freezing certain Indian government properties in the case pertaining to Cairn Energy.

“The same has been communicated through diplomatic channels,” Chaudhary said in reply to a question.

In December 2020, the Arbitral Tribunal, which had its seat in The Hague, pronounced its award in favor of Cairn Energy Pic and Cairn UK Holdings Ltd (CUHL) and asked India to pay Cairn an award amount of $1.2 billion plus interest and $22.38 million towards arbitration and legal costs.

The company maintains it is now owed $1.7 billion.

India filed an application in March to set aside the December 2020 international arbitral award in The Hague Court of Appeal in a dispute that arose in 2015 after the government demanded capital gains tax of Rs. 10,200 crores plus interest and penalty over a reorganization of assets that Cairn undertook at its India unit in 2006, ahead of the listing of its shares in 2007.

The action in France has been the latest in Cairn’s strategy to pursue the Indian government across multiple jurisdictions towards enforcing the arbitration award.

“For handling enforcement proceedings, an international law firm, with relevant experience, has been engaged. In consultation with its counsel tram, the government is taking all appropriate legal steps to protect its interest,” Chaudhary had said earlier in Parliament.

The arbitration award has been registered in other jurisdiction, including the US, the UK, Canada, Singapore, Mauritius, France and the Netherlands, where India has high value assets.

The government had earlier said it will take “appropriate” legal remedies to protect its interest but remained open to an amicable solution to the tax dispute with Cairn Energy within the legal framework.

New Delhi has said the tribunal improperly exercised jurisdiction over a national tax dispute that India never offered or agreed to arbitrate. S-ET

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