Following the merger of CIL with Vedanta Limited in 2017, Cairn now holds a ~5% interest in Vedanta Limited.
This residual shareholding dates from Cairn’s substantial operations in India from 1996–2012. The Company sold down its majority interest in CIL in 2011 and 2012, returning cash to shareholders.
In January 2014, Cairn received notice from the Income Tax Department of India requesting information relating to the Group reorganisation in 2006. The Income Tax Department attached the 10% shareholding in CIL, then valued at approximately US$1 billion. The Company received a draft assessment order from the Indian Income Tax Department in March 2015 and subsequently filed a Notice of Dispute under the UK-India Investment Treaty in order to protect our legal position and shareholder interests.
We strongly contest the basis of the tax assessment order, supported by detailed legal advice on the strength of the legal protections available under international law. As such, the Company has a high level of confidence in its case under the UK-India Investment Treaty which seeks the restitution of the full value of our assets.
International arbitration proceedings are progressing in respect of Cairn’s claim under the UK-India Bilateral Treaty. The final arbitration hearings were held in August in The Hague.
Following the hearing the Arbitral Tribunal will issue a binding and internationally-enforceable award. The drafting and issuance of such an award typically takes several months. In this case, taking into account the delays already suffered by Cairn, the Tribunal has stated that it will endeavour to issue its award as expeditiously as possible.