Challenge by India on the Cairn award on the ground that tax arbitration was never agreed
An arbitration proceeding was invoked by Cain as under India- UK bilateral investment treaty. Subsequently, in December 2020, Cairn won an award that held the levy of taxes using the law of 2012 under the treaty. Therefore the tribunal asked the Indian government to return $1.2 billion-plus cost and interest. India had challenged the tribunal asking it to return $1.2 billion to UK's Cairn because it had not agreed to arbitrate over a 'national tax dispute.' It was argued that India had clutched and sold shares of Cairn in its erstwhile India unit, confiscated dividend due, and kept back tax refunds to recover the tax demand it had levied after two years of passing a law that gave it powers to levy tax retrospectively.
The tribunal that went into Cairn's challenge consisted of three judges, one judge, each being named by the company, the Indian government, and a third neutral leader. The panel, without opposition, overturned the tax and asked India to return the price of shares sold, dividend seized, and tax refund withheld. This, in conjunction with interest and price, involves $1.72 billion. The Government of India is vigorously defending its case during this legal dispute. It's an indisputable fact that the govt. It has applied on 22 March 2021 to line aside from the highly flawed arbitral award within The Hague Court of Appeal.
India's appeal before The Hague Court also says that the claims underlying the award support an abusive minimization scheme that was a gross violation of Indian tax laws, thereby bereave Cairn from protection under the treaty. It further said the proceeding before The Hague court is pending, and therefore the govt is committed to pursuing all legal avenues to defend its case during this dispute. It added that Cairn's CEO and its representatives had approached the govt. For discussions to resolve the matter.
In conclusion, it can be said that the government is also opening doors for an amicable solution to the dispute within the country's legal framework so that a fruitful outcome can be achieved,' the statement added. And Even if Cairn succeeds in getting Air India recognized because of the friend or alter ego of the govt, it will not mean that the airline's assets will fall into the hands of a British firm.
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