India Challenges $1.2 Billion Arbitration Award To UK's Cairn Energy

India said it had never agreed to arbitrate over a "national tax dispute" and challenged an international arbitration tribunal asking it to return $1.2 billion to UK's Cairn Energy Plc.

India has challenged an international arbitration tribunal asking it to return $1.2 billion to UK's Cairn Energy Plc on grounds that it had never agreed to arbitrate over a "national tax dispute", the finance ministry said today. In a statement, the ministry also refuted reports that the government has purportedly asked state-owned banks to withdraw funds from foreign currency accounts abroad in anticipation of the potential seizure of such accounts. While the government appointed a judge on the three-member arbitration panel and fully participated in the proceedings against India seeking Rs 10,247 crore in back taxes from Cairn, the ministry said the tribunal "improperly exercised jurisdiction over a national tax dispute that the Republic of India never offered and/or agreed to arbitrate." India had seized and sold shares of Cairn in its erstwhile India unit, confiscated dividend due and withheld tax refunds to recover the tax demand it had levied two years after passing a law in 2012 that gave it powers to levy tax retrospectively.