India to pay oil explorer
Cairn shares surge after $1.2bn damages success
Cairn’s claim in India has been running since 2014 (pic: Cairn Energy twitter)
Shares in Cairn Energy closed 22% higher after the Edinburgh-based oil explorer won $1.2 billion in damages from the government of India.
The company’s claim was brought under the terms of the UK-India Bilateral Investment Treaty.
The tribunal ruled unanimously that India had breached its obligations to Cairn under the treaty and has awarded Cairn damages plus interest and costs, which now becomes payable.
The dispute between Cairn Energy and the Indian government stretches back to early 2014, when the Indian government froze Cairn Energy’s 10% stake in Cairn India following the introduction of a retrospective tax legislation.
Aside from today’s uplift in the shares (up 36.7p at 205p), investors could benefit significantly from the ruling as Cairn’s chief executive Simon Thomson has previously said the company could make pay-outs to investors if it won the dispute.
Last week it announced the return of $250 million (£180m) to shareholders following sale of its Senegal assets.
Cairn will pay a special dividend of 32p per eligible ordinary share and complete a consolidation of its ordinary share capital. The special dividend is expected to be paid on 25 January to those on the register on 8 January.