Soni Satti
India filed an appeal against the Cairn Energy arbitration verdict at The Hague court, challenging the $1.2 billion award for reasons of sovereignty and taxation grounds. Reportedly, the appeal is lodged on the grounds that taxation-related issues are not included in the bilateral investment deal with the United Kingdom in which the dispute was filed, and thus the arbitration tribunal lacks authority to decide on the issue.
India has taken the position in the appeal that the government has the sovereign right of taxes and that private people cannot vote on it. Furthermore, it is not covered by a bilateral investment deal and is not subject to the jurisdictions of international arbitration. In a decision the government lost an international court dispute against oil company Cairn Energy Plc over a retrospective tax law reform. The case concerns the oil major’s Rs 24,500-crore tax claim (including interest and penalties) on capital gains realized during the reestablishment of its India market.
Cairn Energy Plc chief executive, Simon Thomson, said that the company’s shareholders want the company to use its regulatory powers to reclaim the full award sum from the Indian government. “Our shareholders anticipate India honoring its commitments and resolving this issue quickly.”
Finance Minister Nirmala Sitharaman recently said that it is the government’s “Duty” to appeal when the country’s sovereign authority to tax is being questioned.