Oil and gas explorer Cairn Energy reports it has a “high level of confidence” it will win its long-running tax dispute with the Indian government. The Edinburgh-based group said it would bring back $10 million in dividends it claims are due from Vedanta Ltd, who acquired assets of Cairn India. It also confirmed it is seeking damages worth £1 billion from Vedanta, based on damages equal to the value of its remaining 9.8 per cent shareholding in Cairn India it had expected to sell but was blocked by the Indian government.
In a statement submitted to the stock exchange, Cairn said it would seek “full restitution for Treaty breaches resulting from the expropriation of its investment in India in 2014, the attempts to enforce retrospective tax measures and the failure to treat the company and its investments fairly and equitably.” Cairn said the Indian government had through the international arbitration tribunal, ordered $53 million in dividends due from Cairn India Ltd were no longer restricted and has requested immediate release of the money.
The tribunal had issued a formal order on June 9, from the Indian Government stating the dividends were no longer restricted, and on June 16, the Indian Income Tax Department issued an order to Vedanta Ltd to pay any sums due, which Cairn puts at $104 million. Meanwhile, the Tax Department sold more of Cairn Energy Plc's shares in mining major Vedanta to recover a part of the £1.03 billion retrospective tax demand. After selling a little under two per cent in May and June of Cairn's holding in Vedanta for about $231 million, it sold one per cent more last month when an international arbitration tribunal was holding the final hearing in The Hague against the imposition of a retrospective tax.