In another setback for the Indian government after the Vodafone case, a Permanent Court of Arbitration (PCA) Tribunal has directed it to pay Cairn Energy PLC over $1.23 billion as compensation for breaching terms of the India-UK Bilateral Investment Treaty (BIT)..India has also been directed to pay Cairn over $22 million in legal costs and arbitration costs..The dispute stems from the Indian government's claim for past taxes over the 2006-07 internal rearrangement of Cairn's India business..While determining whether the 2012 amendment was in breach of the BIT between India and the UK, the Tribunal held that India did not have a specific public purpose that would justify applying the 2012 Amendment to past transactions..The Indian counsel for Cairn were Senior Advocate Arvind Datar; Partner at S&R Associates, Niti Dixit; and Partner at Platinum Partners, Uday Walia.Shreyas Jaisimha, Mysore Prasanna, Krishnan Shakkottai, and Bhavya Chengappa of Aarna Law were the Indian lawyers who represented the Indian government..In 2006-07, as a part of its corporate restructuring, Cairn UK transferred shares of Cairn India Holdings to Cairn India. Claiming that Cairn UK had made capital gains from this process, the Income Tax authorities then made a tax demand of Rs 24,500 crore from the company, which refused to pay the same. This prompted the filing of cases at the Income Tax Appellate Tribunal (ITAT) and the Delhi High Court. Cairn lost the case before the ITAT, while the Delhi High Court matter remains pending..In August 2010, two subsidiaries of Cairn entered into a share purchase agreement with a subsidiary of Vedanta for the sale of 51 per cent of Cairn India Limited (CIL’s) share capital. Since the sale was potentially for a controlling interest in CIL, it required approval from the Indian government, which was granted in July 2011..Then, in 2012, the Indian government made amendments to the Finance Act, which had the effect of including in its scope indirect transfers of capital assets by non-residents. The 2012 amendment was passed with retroactive effect as of April 1, 1962.