In its long-running tax dispute with India this morning, CAIRN Energy is toasting victory, sending its share price soaring by almost 30 percent and paving the way for heavy investor payouts.
With the culmination of a dispute with the Indian government dating back to 2014, the Edinburgh-based oil and gas company was paid $1.2 billion (£890 million) in compensation plus interest and costs. At the time, Cairn was facing a tax claim of $1.6 billion relating to incidents leading up to the 2006 IPO of the company’s former Indian subsidiary.
Cairn has continuously maintained that it has paid all taxes due in India and obtained compensation from the government of the country for more than $1.4 billion.
This morning, Cairn reported that the Netherlands’ international tribunal, which was to rule on the claim under the bilateral investment treaty between the United Kingdom and India, had ruled in its favor.
The tribunal ruled unanimously that, under the U.K.-India Bilateral Investment Treaty, India had violated its obligations to Cairn and awarded $1.2 billion in damages to Cairn plus interest and expenses, which are now due.
Cairn Chief Executive Simon Thomson has previously said that if it wins the case, the company could make large payouts to investors.
In early trading, shares rose 27 percent to 211.22p.