Cairn Energy was awarded damages of over $1.2 billion plus interest and costs in a long drawn-out tussle over a retrospective tax dispute last month.
Cairn Energy Plc's Board of Directors has written to Prime Minister Narendra Modi, asking the Indian government to honour an arbitration award and return $1.2 billion to the British oil firm, reported CNBC-TV18.
"A significant milestone was achieved in December 2020 with a unanimous award in favour of Cairn in its arbitration with the Government of India (GoI) under the UK-India Bilateral Trade Investment Treaty. We have engaged with the GoI on adherence and are taking steps to protect our rights," CNBC-TV18 quoted Cairn Energy as saying.
The UK's Boris Johnson government has also asked the Indian government to respect the arbitration award.
The UK-based energy firm was awarded damages by a tribunal at the Permanent Court of Arbitration in The Hague in the retrospective tax case last month.
The three-member tribunal, which comprised a judge appointed by India, unanimously overturned a Rs 10,247 crore retrospective tax demand on the company and asked the government to return value of the shares it sold, dividend it seized and tax refunds it stopped to enforce the tax.
The Modi government, though is now liable to pay it, has not made the payment and may challenge it.
Cairn, in the meantime, has also raised the issue with the International Monetary Fund (IMF) and the World Bank.
Cairn’s blue chip shareholders are also engaging directly with the Indian government.
India's respect for the award would show that retrospective taxation is a thing of the past, and even the UK-India Bilateral Investment Treaty provides strong provisions to respect the award, the firm reportedly said in its communication to the Prime Minister.
Earlier on January 26, Cairn Energy reportedly began to take steps to identify Indian assets overseas against which it can enforce the $1.2 billion award.
Cairn even wrote a letter to addressed to the Indian High Commission in London. In the letter it said if India does not comply with the order it would be a violation of international rules on arbitration awards, commonly called the New York Convention. The copy of the letter was sent to finance and external affairs ministries in New Delhi.