Cairn Energy PLC, Edinburgh, is disputing a tax claim by the Indian government for $1.6 billion related to the 2006 reorganization of its former Indian subsidiary.
The Scottish company said the Indian Income Tax Department is acting under retroactive provisions of a 2012 law.
The reorganization involved incorporation of Cairn India Ltd., controlling interest in which Cairn Energy sold in 2011 to Vedanta Resources, London, retaining 10% (OGJ Online, Dec. 6, 2011).
Cairn Energy said the government, because of the tax dispute, is preventing its sale of its remaining Cairn India interest, which it estimates to be worth $700 million.
The company said it will file a notice of dispute under the UK-India Investment Treaty.