Open to ‘amicable solution’ with Cairn Energy: Finance ministry

Finance Ministry (Image: PTI)

Hours after Cairn Energy secured permission from a French Court to secure Indian sovereign assets in Paris, the finance ministry said that it was open to an “amicable solution” in its tax dispute with the company, and that it would take legal remedies to protect India’s interests.

In an official statement, the ministry said that the government had not received any notice, order or communication from any French Court.

“Government is trying to ascertain the facts, and whenever such an order is received, appropriate legal remedies will be taken, in consultation with its counsels, to protect the interests of India,” the statement said.

“The government remains open for an amicable solution to the dispute within the country’s legal framework,” it said, adding that there have been constructive discussions held with the company’s management.

Early on the morning of July 8, the Financial Times newspaper reported that the British oil and gas company had effectively seized Indian state-owned properties in Paris, in order to recover the arbitration award in the retrospective tax dispute.

The Edinburgh-based oil producer has secured a French court's permission to seize 20 Indian government properties, valued at over GBP 20 million. Cairn said Tribunal Judiciaire de Paris's approval of freezing the properties was a "necessary preparatory step to taking ownership of the properties and ensures that the proceeds of any sales would be due to Cairn", the publication reported.

Settlement options have been discussed

Moneycontrol has learnt that as part of the discussions with Cairn Energy’s management, India had offered the company a settlement under the ‘Vivaad se Vishwas’ scheme, but that offer was rejected.

It is understood that, as things stand, any offer of an ‘amicable solution’ between the Centre and Cairn Energy has to come from the company. The Centre is of the view that while it will not pay up the sum of $1.2 billion plus interest that Cairn Energy claims, a 'reasonable' figure can be reached at.

In May, Cairn Energy had sued Air India in the US District Court for the Southern District of New York, to ratchet up pressure on the Indian government to pay the sum of $1.2 billion plus interest and costs that the British firm was awarded by an arbitration tribunal in December.

It had already warned before that it had initiated the process of seizing Indian assets abroad. The case against Air India, as well as the ruling in Paris, is part of that process.

In December 2020, a Permanent Court of Arbitration at The Hague had ruled that the Indian government should pay damages worth $1.2 billion to Cairn Energy, since a case of retrospective tax was wrongly applied on the company.

The court cited that the claim by the Indian government was “in breach of the guarantee of fair and equitable treatment”. Including interests, the total dues that India owes to the company at this point are around $1.7 billion.

Cairn Energy chief executive officer Simon Thomson had visited India in February to discuss an out-of-court settlement. The company said that its engagement with the government of India on its arbitration award will continue in parallel with pursuing options of enforcement and monetisation of the award.