Cairn Energy seeks $ 5.6bn damages over tax notice

NEW DELHI, JULY 12

UK based Cairn Energy has hit back at India demanding a compensation of $ 5.6 billion from the country for raising a retrospective tax demand of ` 29,047 crore on 10- year old internal reorganisation of its India unit.

Cairn Energy in its ‘ statement of claim’ filed with an international arbitration panel has asked for withdrawal of the tax demand and declaring that India has “failed to uphold its obligations” under the United Kingdom-India Investment Treaty by not giving its investments in the country “fair and equitable treatment.”

A three- member arbitration panel headed by Geneva- based arbitrator Laurent Levy began hearing Cairn Energy’s plea against tax demand in May.

The total compensation sought by the company is equal to the tax demand raised and the value of Cairn Energy’s 9.8 per cent shareholding in Cairn India.

“International arbitration proceedings, under the United Kingdom- India Investment Treaty, have commenced to settle the retrospective tax which has been ongoing with the government of India since January 2014. Cairn has filed its Statement of Claim to the International arbitration panel,” said a spokesperson of Cairn Energy.

The company has sought $ 1.05 billion in compensation for the loss of value its 9.8 per cent shareholding in its erstwhile subsidiary Cairn India suffered following income tax department raising the tax demand in January 2014 and attaching the shares.

CAIRN ENERGY has asked for withdrawal of the tax demand and sought compensation from India for not upholding its obligations" under the UK- India Investment Treaty by not giving it fair treatment.