Towards the end of 2020, an investor-State dispute settlement (ISDS) arbitration tribunal, in a case involving the British oil and energy giant, Cairn, and the Republic of India, found India guilty of having violated the India-United Kingdom (UK) bilateral investment treaty (BIT).
The dispute arose when the Indian government, armed with the retroactive 2012 amendment in the Income Tax Act, demanded that Cairn pay taxes on the alleged capital gains it made due to a 2006 internal corporate restructuring. The tribunal held that India’s conduct breached the fair and equitable treatment (FET) provision of the India-UK BIT, and ordered India to pay more than $1.2 billion to Cairn.
Although an ISDS award is binding on the parties, it does not bring the dispute to an end. There are two more obstacles.
