Cairn Energy has won an international arbitration case against the Indian government over a tax dispute, ending one of the country's highest-profile disputes, two sources with direct knowledge of the matter told Reuters.
Cairn took the case to arbitration in 2015 to fight against a demand in 2014 from the Indian tax department for 102 billion rupees (USD 1.4 billion) in taxes it said were owed on capital gains related to the 2007 listing of its Indian unit.
In 2011, Cairn Energy sold its majority stake in Cairn India to Vedanta Ltd, reducing its stake in the Indian company to about 10 percent.
The Indian government seized the remaining shares in 2014 after the tax complaint was made, as well as dividends Vedanta owed to Cairn Energy for its holdings in the Indian firm.
In 2018, Cairn Energy said it would write down the value of its investment in Vedanta after Indian tax authorities sold USD 216 million worth of its shares in the Indian mining company.
The Indian government did not immediately respond to a request for comment. Cairn Energy could not be reached. Shares in Vedanta rose as much as 5 percent on Wednesday.
The arbitration was initiated under the India-UK investment treaty and Cairn had sought damages of over USD 1 billion at the time. It was not immediately clear what damages the international arbitration court awarded to Cairn.
The ruling comes weeks after India lost an international arbitration case against Vodafone Plc in September over a USD 2 billion retrospective tax dispute which had spooked investors at the time.
The Indian Government in its response said it will study arbitration case award in Cairn Energy Plc and Cairn UK Holdings Limited.
It is stated that the award in the arbitration case under India-UK Agreement for Promotion and Protection of Investments invoked by Cairn Energy Plc and Cairn UK Holdings Limited against the Government of India has been passed.
The Government will be studying the award and all its aspects carefully in consultation with its counsels. After such consultations, the Government will consider all options and take a decision on further course of action, including legal remedies before appropriate fora.
First Published: IST