Cairn Energy wins tax dispute with Indian govt, shares surge

Shares of Cairn Energy surged on Wednesday after the oil and gas exploration and development company won a long-standing tax dispute with the Indian government over backdated charges and said it will receive $1.2bn in damages, plus interest and costs.

Cairn said on Wednesday that a tribunal in The Hague ruled unanimously that India had breached its obligations to the company under the UK-India Bilateral Investment Treaty.

In March 2015, Cairn’s Indian subsidiary, Cairn UK Holdings Limited, received a draft tax assessment order from the Indian Income Tax Department arising from the group reorganisation in fiscal year 2006/7, with an initial bill of $1.6bn plus any applicable interest and penalties.

Cairn instructed its lawyers at the time to dispute the bill under the UK-India Investment Treaty.

At 0810 GMT, the shares were up 39.5% at 231.40p.

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