INDUSTRY NEWSOIL & GASOPINION PIECEPolicy & Govt

View: Retro tax is a bad idea but stiffing Cairn Energy on an arbitration settlement only makes it worse

Back when global investors still believed Prime Minister Narendra Modi would keep his promise to end the previous regime’s “tax terror,” his newly elected government made a costly error. In March 2015, someone in India’s labyrinthine bureaucracy decided to send a revenue demand to U.K.’s Cairn Energy Plc — ruining Chief Executive Officer Simon Thomson’s birthday.

This March 10, Thomson has every reason to celebrate both his birthday and victory in a tortuous legal saga that ended right before Christmas with a $1.2 billion international arbitration award in Cairn’s favor. But there’s still one big glitch: The check that should have been in the bank by now isn’t even in the mail. That raises the unpleasant prospect of a private company having to legally seize sovereign property globally, a course of action some of its shareholders are starting to recommend.

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