Govt may go in for legal challenge to Vodafone, Cairn arbitration outcomes

New Delhi, Dec 23 : The Indian government may mount a challenge against the arbitration awards passed against it over retrospective taxation levy on Cairn Energy and Vodafone Group.
Sources privy to the development said that as both the arbitration cases have gone against the government and the Cairn Energy award also makes the government liable for damages, the order may be challenged at appropriate fora.
The government was waiting for outcome of the arbitration initiated against it for levy of over Rs 10,000 crore retrospective tax on Cairn Energy before finalising its stand on a similar tax dispute case with Vodafone Group where an international arbitration court has ruled against in favour of the telecom company.
A Finance Ministry statement on Wednesday (after the Cairn Energy arbitration order) said that it will be studying the award and all its aspects carefully in consultation with its counsel and then consider all options and “take a decision on further course of action, including legal remedies before appropriate fora”.
In the Cairn Energy case, the international arbitration tribunal ruled that India’s tax claim of Rs 10,247 crore in past taxes over internal reorganisation of Cairn’s India business was not a valid demand.
In a statement, Cairn said that the tribunal has awarded damages of $1.2 billion along with interest and costs.