New Delhi: Cairn Energy Plc of the UK on Monday said it expects the long-running arbitration process against the Indian authorities over retrospective taxation to be more protracted than originally anticipated and is unlikely to be concluded until later this year.
An international arbitration tribunal had in August 2018 concluded main court hearings in Cairn Energy's challenge to the Indian government using retrospective legislation to seek ₹10,247 crore in taxes. The tribunal was supposed to give an award by February 2019 but the same is now expected not before the end of the year.
Cairn Energy in a statement said that it had last month written to the three-member panel seeking guidance on the likely timing of the arbitration award.
"The Panel has now responded that although it remains mindful of Cairn's need for a swift decision, given its workload and the number of matters before it, it is still unable to provide specific guidance on timing," the statement said.
"As a result of this, Cairn expects that the timetable for issuing the award will be more protracted than originally anticipated and is unlikely to be before late 2019."
In January 2014, Cairn Energy received notice from India's income tax department, requesting information relating to the group reorganization done in 2006. The I-T department attached the company's near 10% shareholding in Cairn India, which was subsequently merged with its parent Vedanta.
Cairn Energy held a 4.95% stake in Vedanta post that move.
Cairn Energy received a draft assessment order from the Indian I-T department in March 2015 and subsequently filed a notice of dispute under the UK-India Investment Treaty in order to protect its "legal position and shareholder interests".
Pending arbitration proceedings, the I-T department, beginning May 2018, has sold most of the Cairn shares to recover tax dues.
With merits submissions and hearings concluded, the arbitration panel is preparing its final award.
"The panel had originally guided arbitration parties that it expected to issue an award expeditiously following the conclusion of the main merits hearings in The Hague held in August 2018," Cairn said.
"When the parties appeared before the tribunal in December 2018, the panel advised that it had not been able to advance the award as expected due to the number of procedural matters that had been brought before it since the August hearings, and that it is was not in a position at that time to give guidance to the parties on the expected timing of the issuance of the award."
Final merits hearings for the arbitration concluded during 2018.
Cairn Energy's claim under the treaty is for monetary compensation of $1.4 billion, the sum required to reinstate the company to the position it would have been in, but for the actions of the tax department since January 2014.
"The arbitration Panel is expected to issue a binding and internationally enforceable award, and Cairn continues to have a high level of confidence in the merits of its claims in the arbitration," it said.