InvestorQ : Why is Cairn filing cases in so many countries for the $1.4 billion order against the Indian government?
Anamika Sodhani made post

Why is Cairn filing cases in so many countries for the $1.4 billion order against the Indian government?

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Angel dcosta answered.
8 months ago
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This a typical tactic that Cairn Energy PLC is using to build up the pressure on the Indian government, which has been refusing to relent and is not willing to compromise on the sovereign right of the government to tax transactions. That is why, Cairn is trying to build international pressure on the Indian government.

As of now, Cairn already has courts in 5 countries, including the US and UK, which have already recognized the arbitration award of the tribunal which has instructed the Indian government to return $1.4 billion to Cairn Energy PLC. This includes the amount of dividends and tax refunds as well as capital gains withheld by the Indian Income Tax department for non-payment of the retrospective taxation, which is much higher.

One needs to understand what this ratification by the courts actually means? With this ratification, Cairn Energy can call to start seizing Indian assets in those countries if the Indian government refuses to pay up. In total, Cairn moved courts in 9 nations to enforce its $1.4 billion arbitral award on the retrospective application of capital gains tax. This pertains to the transaction wherein Cairn Energy PLC had sold a stake in Cairn India to Vedanta PLC.

Cairn has also started the process of registering the award in Singapore, Japan and the UAE, since there are substantial Indian assets parked in this region. Once more courts recognizes the award, Cairn can petition to seize Indian government assets in all these countries. However, practically, it is never that simple as there are a lot of diplomatic considerations that will come in the way. For now, India is filing a petition against this order.

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