Cairn Energy tax dispute: Open to an amicable solution, says Centre

New Delhi has filed an appeal against the order but the UK based Energy firm has started identifying Indian assets overseas, including bank accounts [File image: Cairn Energy]

The Finance Ministry, on May 23, said that it is open to an amicable solution in its retrospective tax dispute with British energy major Cairn Plc. This comes a little more than a week after Cairn had sued Air India in order to make the government pay up an arbitration award of $1.2 billion plus interest.

The Ministry also said that reports stating that the centre had asked state-owned banks to withdraw funds from their foreign currency accounts were 'false' and 'incorrect'.

"Constructive discussions have been held and the government remains open for an amicable solution to the dispute within the country’s legal framework," said an official statement.

The release also stated that the CEO and the representatives of Cairn Energy have approached the government for discussions to resolve the matter. When asked if this approach is different from the meeting that Cairn CEO Simon Thomson had with government officials in February, a source said that those discussions hadn't reached a conclusion yet and are still ongoing.

"Government of India is vigorously defending its case in this legal dispute. It is a fact that the Government has filed an application on March 22, 2021, to set aside the highly flawed December 2020 international arbitral award in The Hague Court of Appeal," the statement said.

On May 15, Cairn Energy sued Air India in the US District Court for the Southern District of New York. The centre had then stated that neither it nor  Air India had received any notice regarding the case.

Moneycontrol had reported then that a high level inter-ministerial group comprising officials from the Finance Ministry's departments of Economic Affairs and Revenue, and from the External Affairs and Law ministries will decide on India's next course of action in the case.

New Delhi had earlier filed an appeal against The Hague Court of Appeal's order but the UK based energy firm has started identifying Indian assets overseas, including bank accounts, that could be seized in the absence of a settlement, which Cairn says it is still pursuing.

The company has registered its claim against India in courts in the United States, Britain, France, the Netherlands, Singapore and Quebec, moves that could make it easier to seize assets and enforce the arbitration award.