Update, October 2026: This post reports India’s plan, in March 2021, to challenge the Cairn award; the dispute ended after Parliament passed the Taxation Laws (Amendment) Act 2021, when Cairn agreed to withdraw its arbitration and enforcement actions and India refunded INR 7,900 crore in 2022. For the current position on investment-treaty protection in India, see India bilateral investment treaty protection: how to secure your investment before a dispute.
India has begun the process of appealing against the Cairn Arbitration Award which needed India to return $1.4 billion to Cairn Energy Plc. India is ready to address any enforcement proceedings that are initiated and will defend its interests and sovereign rights. Cairn won the award from a tribunal under the India–UK bilateral investment treaty, in a dispute over a retroactively applied capital gains tax.
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The Arbitration award was recognized by the Courts in 5 countries because this will enable the British oil company to seize Indian assets in these nations. It also said that Cairn did not pay taxes anywhere in the world on the gains that it made in India. India could redress the situation of Double Non-Taxation and tax abuse if needed. India will also be ready for a constructive settlement.
Cairn CEO visited the Finance Minister of India last month for what could be termed as constructive settlement for the case. The Government emphasized that any settlement sought should be within the existing laws, pointing out the fact that Cairn has tried to evade tax. The Government also said that the appeal would not only be against Cairn but also with other countries where Cairn had activated legal procedures on related legal issues.
Shareholders were pushing for the tax recovery, whereas Cairn suggests that Government could hand over its assets overseas to meet the obligation of returning the value of the shares sold, dividend seized, and tax refund withheld by India’s Income Tax Department.
This Article is a Part of Our Arbitration: An Introduction with Special Reference to the United Arab Emirates Blogpost.
About ATB Legal
ATB Legal is a law firm practising in India and the UAE. Its disputes and investment work covers investment protection under India’s treaties, international arbitration, the enforcement of awards and judgments in India, and foreign direct investment.
This article is general information, not legal advice, and is not a solicitation of work. Under the Bar Council of India rules, Indian advocates may not advertise or solicit work.
Part of ATB Legal’s Dispute Resolution practice.