"The formal hearings & submissions in respect of Cairn's claim under the United Kingdom (UK)-India Bilateral Investment Treaty concluded in 2018 & the arbitration panel is preparing its final award," the company said in its half-year results for 2019.
United Kingdom (UK)'s Cairn Energy on Tuesday said the arbitration process against India on imposition of a Rs 10,247-crore retrospective tax demand is likely to be protracted & a decision isn't expected before late 2019.
"The formal hearings & submissions in respect of Cairn's claim under the
United Kingdom (UK)-India Bilateral Investment Treaty concluded in 2018 & the arbitration panel is preparing its final award," the company said in its half-year results for 2019.
The 3-member panel, it said, had originally indicated issuance of an award as expeditiously as possible. But "workload & the number of matters before the panel have meant that the timetable for issuing the award will be more protracted than originally anticipated & the award is, therefore, unlikely to be before late 2019," it said.
"Drafting of the award by the tribunal is ongoing & Cairn continues to have a high level of confidence in the merits of its claim," Cairn Energy said, adding that it was confident of success in the arbitration.
Cairn Energy is seeking full restitution for losses totalling more than United States Dollar (USD) 1.4 billion resulting from govt "expropriation of its investments in India in 2014, & India's unfair & inequitable treatment of those investments, due to the imposition of retrospective tax measures."
The company, which gave the country its biggest oil discovery, received a notice from the Income Tax (IT) Departt. in Jan 2014, requesting information relating to the group re-organisation done in 2006.
Alongside, the Income Tax (IT) Departt. attached the company's near 10 per cent shareholding in its erstwhile subsidiary, Cairn India. In Mar 2015, the tax departt. sought Rs 10,247 crore in taxes on alleged capital gains made by the company in the internal reorganisation.
Cairn Energy had in 2010-11 sold Cairn India to Vedanta. Following the merger in Apr 2017 of Cairn India & Vedanta, the United Kingdom (UK) firm's shareholding in Cairn India was replaced by a shareholding of about 5 per cent in Vedanta issued together with preference shares.
In addition to attaching its shares in Vedanta, the tax departt. seized dividends due to it from those shareholdings totalling Rs 1,140 crore & set of a Rs 1,590 crore tax refund against the demand.
Cairn Energy in 2015 initiated an international arbitration to challenge the retrospective taxation.
Pending final award, the tax departt. sold Cairn Energy's shares in Vedanta to recover part of the tax demand.
"The group also has legal advice confirming that the maximum amount that could ultimately be recovered from Cairn by the Income Tax (IT)Departt., in excess of the assets already seized, is limited to the value of company's assets, including the remaining ordinary shares in Vedanta," it said on Tuesday.
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