UK-based Cairn Energy said it will drop litigations to seize Indian properties in countries ranging from France to the US, within a couple of days of getting a $ 1 billion refund resulting from the scrapping of a retrospective tax law. The firm, which gave India its biggest onland oil discovery, termed "bold" the legislation passed last month to cancel a 2012 policy that gave the tax department power to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India.
The offer to return money seized to enforce retrospective tax demand in lieu of dropping all litigations against the government "is acceptable to us," Cairn CEO Simon Thomson said in an interview. Cairn will drop cases to seize diplomatic apartments in Paris and Air India airplanes in the US in "a matter of a couple of days" after the refund, he said adding Cairn's shareholders are in agreement with accepting the offer and moving on.
Seeking to repair India's damaged reputation as an investment destination, the government last month enacted new legislation to drop £11 billion in outstanding claims against multinationals such as telecoms group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn.
About £810 million collected from companies under the scrapped tax provision are to be refunded if the firms agreed to drop outstanding litigation, including claims for interest and penalties. Of this, £790 million is due only to Cairn. "Once we get to final resolution, part of that resolution is us dropping everything in terms of litigation. We can do that within a very short period of time, just a matter of a couple of days or something," Thomson said. "So we are preparing on the basis of getting this resolution quickly, all these cases being dropped, and putting all this behind."
He said all enforcement proceedings brought because of the Government of India's refusal to honour an international arbitration award asking it to return the value of money seized to enforce the retrospective tax demand, will be dropped. "Everything will be dropped. There will be no more litigation, that will be it. It will clear the matter up," he said.
