London-listed Cairn Energy has won a nearly £1 billion arbitration case against the government of India.
The oil and gas company said a tribunal in the Netherlands has awarded it 1.2 billion US dollars (£900 million) in damages, plus interest and costs.
The case dates back to a 2014 tax demand that Cairn was handed by the government in New Delhi.
The country’s tax authority was asking for more than 100 billion rupees (£1 billion) – money apparently owed on capital gains from a 2007 listing of Cairn’s wing in India, in which it still owned a 10% stake.
Cairn, which filed a suit against India in 2015, said: “Cairn announces that the tribunal established to rule on its claim against the government of India has found in Cairn’s favour.
“Cairn’s claim was brought under the terms of the UK-India Bilateral Investment Treaty, the legal seat of the tribunal was the Netherlands, and the proceedings were under the registry of the Permanent Court of Arbitration.
“The tribunal ruled unanimously that India had breached its obligations to Cairn under the UK-India Bilateral Investment Treaty and has awarded to Cairn damages of 1.2 billion US dollars plus interest and costs, which now becomes payable.”
The decision comes just three months after another tribunal in The Hague found in favour of Vodafone over a 2 billion US dollar (£1.5 billon) tax bill it had been handed by the Indian government.
CMC Markets analyst David Madden said: “Cairn Energy was in a legal battle with the government of India in relation to tax.
“The arbitration ruling found that India had breached its obligation to the energy company under the terms of the UK-India Bilateral Investment Treaty. The tribunal awarded 1.2 billion dollars in damages to Cairn, hence why the shares have surged this morning.”
Cairn Energy’s share price was up by 21% around midday on Wednesday.