British oil explorer Cairn Energy said it would seek over $600 million from India in damages for the loss of value of its holding because of a retrospective taxation claim of Rs 10,247 crore. Using a retrospective legislation, the income tax department had in January 2014 issued the draft tax assessment order to Cairn over its internal business reorganisation in 2006 and barred it from selling its 9.8 per cent stake in Cairn India.
Cairn said it had initiated an arbitration challenging the levy of tax under the UK-India Investment Treaty. International arbitration proceedings to resolve the retrospective tax issue in India have now formally commenced following the agreement between Cairn and the Government of India on the appointment of a panel of three international arbitrators under the terms of the UK-India Investment Treaty.
Geneva-based arbitrator Laurent Levy has been appointed as the presiding officer of the three-member arbitrator panel. Cairn had previously named former Bulgarian minister Stanimir A. Alexandrov as its arbitrator, while the Indian government in November appointed Singapore-based lawyer J. Christopher Thomas as its arbitrator.
Meanings
- Retrospective means looking back on or dealing with past events or situations.
- Arbitration is the use of an arbitrator to settle a dispute.
- Arbitrator is an independent person or body officially appointed to settle a dispute.
- Commence means begin.
