A slew of options was proposed during a series of hectic talks between Cairn Energy and the Indian government over the $1.2-billion arbitration award in favour of the former last week. It included computation of capital gains and participation in the `Vivad se Vishwas` dispute resolution scheme. The Indian Finance Ministry officials indicated that India is likely to appeal against the arbitration award by a Permanent Court of Arbitration at The Hague before March 21. Cairn Energy Plc on 21st February said it was hopeful that an acceptable solution to its tax dispute with the Indian government could be found to avoid prolonging and exacerbating the `negative issue` for all parties. The company said it was clear it should continue to take all necessary steps to protect the interests of its shareholders. The energy major is learnt to have raised concerns over the tax computation of the 2006-07 deal, which it felt should have been computed on a long-term capital gains basis instead of short-term capital gains, resulting in the tax liability of US$ 248-275 million, instead of the US $ 1.45 billion tax demand. Cairn Energy said, “Notwithstanding and without prejudice to our rights under the international arbitration award, we have discussed a number of proposals with the aim of finding a swift resolution that could be mutually acceptable to the Government of India and the interests of Cairn`s shareholders. Assuming such a resolution can be achieved, we look forward to being able to move on to further opportunities to invest in India, which continues to import a majority of the energy sources it consumes,”.
A slew of options was proposed during a series of hectic talks between Cairn Energy and the Indian government over the $1.2-billion arbitration award in favour of the former last week. It included computation of capital gains and participation in the `Vivad se Vishwas` dispute resolution scheme. The Indian Finance Ministry officials indicated that India is likely to appeal against the arbitration award by a Permanent Court of Arbitration at The Hague before March 21. Cairn Energy Plc on 21st February said it was hopeful that an acceptable solution to its tax dispute with the Indian government could be found to avoid prolonging and exacerbating the `negative issue` for all parties. The company said it was clear it should continue to take all necessary steps to protect the interests of its shareholders. The energy major is learnt to have raised concerns over the tax computation of the 2006-07 deal, which it felt should have been computed on a long-term capital gains basis instead of short-term capital gains, resulting in the tax liability of US$ 248-275 million, instead of the US $ 1.45 billion tax demand. Cairn Energy said, “Notwithstanding and without prejudice to our rights under the international arbitration award, we have discussed a number of proposals with the aim of finding a swift resolution that could be mutually acceptable to the Government of India and the interests of Cairn`s shareholders. Assuming such a resolution can be achieved, we look forward to being able to move on to further opportunities to invest in India, which continues to import a majority of the energy sources it consumes,”.
