Vedanta is also likely to withdraw arbitration
Cairn Energy Plc on Tuesday said it was ready to withdraw all cases it had slapped against the Indian government for enforcing a $1.2-billion arbitration award the company had won in December 2020. This is part of the settlement under recent legislation by Parliament.
Also, Vedanta, which had bought Cairn Energy’s erstwhile subsidiary Cairn India in 2011, is likely to withdraw arbitration it had filed in Singapore seeking around Rs 5,000 crore as damages from the government.
London Stock Exchange-listed Cairn Energy will enter into “statutory undertakings” with the government. This will enable a refund of retrospective taxes collected from it by way of asset seizures since 2014. It will get a refund totaling Rs 7,900 crore (approximately $1.06 billion) once it withdraws litigation and enters into an agreement with the government.
According to Simon Thomson, chief executive, Cairn Energy Plc, the company would be required to withdraw its international arbitration award claim, interest, and costs, and end legal enforcement actions in order to be eligible for the refund under the terms of new legislation. The company had registered the arbitration award in many jurisdictions, including the US, the UK, Canada, Singapore, Mauritius, France, and the Netherlands. It had even sought to mortgage government properties in Paris and sought claim on Air India as “the alter ego of the Indian state”.
According to draft rules of the Taxation Laws (Amendment) Act, 2021, released by the Central Board of Direct Taxes (CBDT) last week, companies have to file a declaration to “irrevocably withdraw, discontinue and not pursue” any legal proceedings.
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