Shares of independent oil and gas exploration company, Cairn Energy (LON: CNE) are surging on Wednesday after India was ordered to pay $1.2 billion following arbitration proceedings in a tax dispute.
Cairn shares rose by 41.53% after the announcement and are currently trading at 234.8p.
Cairn’s claim was brought under the terms of the UK-India Bilateral Investment Treaty with the Netherlands being the tribunal's legal seat.
According to Bloomberg's report, the court ruled that the tax claim made by the Indian government was not a valid demand and said that the money withheld will need to be repaid to Cairn along with interest and costs.
UK-based Cairn received the tax claim in 2015 relating to a restructuring undertaken in 2006 while the company was preparing for an IPO of Cairn India. This prompted the Indian government to seize 10% of Cairn India’s shares.
Since that time, the company has sold off most of the holdings in its Indian arm. Cairn then filed its dispute, with arbitration starting in 2015.
