InvestorQ : What is the latest update with Cairn Energy PLC filing a case against the Indian government to recover its dues in the retrospective case?
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What is the latest update with Cairn Energy PLC filing a case against the Indian government to recover its dues in the retrospective case?

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swati Bakhda answered.
2 weeks ago
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It was an interesting and action-packed week for the long-standing battle between the government of India and Cairn Energy PLC. In its latest move, Cairn Energy opted to approach a US district court to get to enforce the tribunal order instructing the Indian government to pay up $1.3 billion. India has already decided to take the case up against Cairn and it will be a test of its resolve.

For a quick background, the case pertains to the sale of stake in Cairn India by UK based parent, Cairn Energy, to Vedanta owned by Anil Agarwal. The government of India had slapped the company with a huge tax bill on retrospective basis to the tune of over $3 billion for dodging capital gains tax via use of global ownership and residency structures.

In response, Cairn Energy had gone to an independent tribunal which had recently ruled against the Indian state and in favour of Cairn Energy. It had cited clauses of the Indo-UK trade treaty to set aside this demand by the Indian government. Cairn Energy wants a US court to enforce the tribunal order so Indian assets can be attached, in a worst-case scenario.

In the case of Cairn, the Indian government also withheld dividends and tax refunds to Cairn Energy to partially recover its dues. It is this money that Cairn Energy wants to recover from the Indian government. Cairn is now trying to get a US court to enforce the ruling to put pressure on the Indian government. Meanwhile negotiations are also going on.

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