Nearly two months following it won an international arbitration tribunal ruling against the Indian government levying taxes retrospectively, Britain’s Cairn Energy Plc Chief Executive Simon Thomson on Thursday met top rated finance ministry officials in hope of speedily resolving the problem.
“We had a constructive dialogue and the dialogue is ongoing,” Thomson told reporters following meeting Finance Secretary Ajay Bhushan Pandey, CBDT Chairman P C Mody and other tax officials.
He refused to comment on what transpired at the meeting. “I can’t comment more on the meeting.”
While government officials have hinted at filing an appeal against the December 21 ruling, Cairn shareholders have been pressing the enterprise management to get the USD 1.4 billion the tribunal had ordered India to return.
Thomson had been searching for at a meeting with Finance Minister Nirmala Sitharaman and had even posted a video final week outlining his wish to meet her towards getting a fast resolution.
Cairn has threatened to seize Indian government assets overseas if New Delhi fails to return the worth of the shares sold, dividend seized and tax refund withheld by the earnings tax division to recover element of the tax demand.
The firm has began identifying assets it could seize if the Indian government does not comply with the tribunal order.
Sources have mentioned that these could involve airplanes and ships.
Last week, it the filed instances in the US, the UK and the Netherlands courts to register the arbitration award, a prelude to searching for legal seizure of assets.
Cairn’s hands have been forced by its shareholders who following waiting patiently for seven years for resolution of the tax problem, now desires action to recover the award. The shareholders involve significant monetary institutions such as BlackRock, Fidelity, Franklin Templeton, Schroders and Aviva.
But, given that the 582-web page judgment was issued, the government has offered no indication about regardless of whether it intends to honour the verdict, even although payment was due instantly.
Rather than sit and wait for the government response, Cairn has moved to cover for all eventualities, the sources mentioned.
Before going in for the meeting, Thompson mentioned the arbitration the enterprise initiated against the earnings tax division slapping a Rs 10,247 crore demand on an internal reorganisation it carried out of the India unit ahead of its listing, had been “going on for some considerable time.”
“We are pleased that it has come to an end (and) the award has been granted,” he mentioned. “Our shareholders want this to be resolved as quickly as possible and that is why we are here to have a discussion today.”
He refused to comment on the government difficult the award, saying the enterprise is hunting forward to “a positive resolution.”
“We are looking forward to having a discussion with the government, let’s see how it goes,” he mentioned.
An international tribunal had in December unanimously ruled that India violated its obligations below the UK-India Bilateral Investment Treaty in 2014, when the earnings tax division slapped a Rs 10,247-crore tax demand utilizing legislation that gave it powers to levy taxes retrospectively.
Soon following searching for Rs 10,247 crore in taxes more than alleged capital gains created by the enterprise more than a 2006-07 reorganisation of India company ahead of its listing, the tax division seized Cairn’s residual 10 per cent stake in Cairn India.
In a ruling Cairn had previously described as “final and binding”, the tribunal ordered New Delhi to spend USD 1.2 billion in damages, plus interest and fees, to compensate Cairn for the shares — extended sold off by the tax division — as properly as confiscated dividends and withheld tax refunds. This totals USD 1.4 billion.
Last month, Cairn wrote to the government saying its shareholders “expect early resolution, failing which they will expect Cairn to pursue the award in conformity with its rights under the treaty”.
The award can be enforced against Indian assets in a lot of jurisdictions about the planet for which the essential preparations have been place in spot, the letter added.
The letter did not specify the assets that could possibly be seized but it is extensively speculated that the targets could involve bank accounts as properly as mobile and immobile home, such as the assets of public sector enterprises such as state-owned Air India, but not diplomatic assets.
If it does occur, India would not be the 1st nation to face seizure of its international assets from an power enterprise.
In 2018, ConocoPhillips seized solutions from an oil refinery owned by PDVSA in the Dutch Caribbean following the Venezuelan state-owned oil enterprise failed to honour an international judgment awarding Conoco USD 2 billion in compensation for the expropriation of its assets in 2007.
Earlier this month, Minister of State for Finance Anurag Singh Thakur had told Lok Sabha that the Cairn arbitration award was “under consideration of the government.”
Cairn Energy had in 2011, sold Cairn India to mining billionaire Anil Agarwal’s Vedanta Group, barring a minor stake of 9.8 per cent. It wanted to sell the residual stake as properly but was barred by the I-T division from undertaking so. The government also froze the payment of dividends by Cairn India to Cairn Energy.