InvestorQ : What happens next, now that India has challenged the Cairn tax order in the international court?
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What happens next, now that India has challenged the Cairn tax order in the international court?

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Niti Shenoi answered.
3 weeks ago
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Last month, the arbitration tribunal had given an arbitral award in favour of Cairn UK PLC and against India. Now India has challenged the award in a Dutch court arguing that the arbitration tribunal verdict had wrongly favoured British energy major Cairn Energy Plc without fully getting into the facts and the nuances of the case. The appeal was filed by the Indian government against the arbitral tribunal order on 22 March.

The Finance Minister, Nirmala Sitharaman, had already made it clear that no legal body could question the Indian government’s sovereign right to tax incomes generated in India and any such arguments were prima facie were null and void. That is the stance that India has taken before it got into the process of filing the appeal. India has clarified that it intends to strongly defend any move by the company to enforce the award.

The government has offered to settle the dispute under the Vivad se Vishwas direct tax dispute resolution scheme of the government of India. While there have been several rounds of discussions between the Indian government and senior management of Cairn UK PLC, not much progress has been made with both parties sticking to their stands as of now.

As of now, the courts in 5 countries including the US and UK have given recognition to the arbitration award. That technically means Cairn can recover their dues by attaching assets of the Indian government in these jurisdictions including aircraft, ships and bank accounts. However, this is easier said than done as there are diplomatic considerations too.

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