New Delhi, Dec 23 (IANS): The Centre has said it will consider further action regarding the arbitration award passed in favour of Cairn Energy after studying the award and consulting with its counsels.

British energy major Cairn Energy has won an international arbitration case against the Indian government over a tax dispute. The international arbitration tribunal ruled that India's tax claim of Rs 10,247 crore in past taxes over internal reorganisation of Cairn's India business was not a valid demand.

In a statement Cairn said the tribunal has awarded damages of $1.2 billion along with interest and costs.

The Finance Ministry said: "The government will be studying the award and all its aspects carefully in consultation with its counsels. After such consultations, the government will consider all options and take a decision on further course of action, including legal remedies before appropriate fora."

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.

Cairn Energy had in 2010-11 sold Cairn India to Vedanta. Post the merger of the two in April 2017, the UK firm's shareholding in Cairn India was replaced by a shareholding of about five per cent in Vedanta issued together with preference shares.

Along with attaching its shares in Vedanta, the tax department seized dividends of around Rs 1,140 crore due to it from the shareholdings and set-off a Rs 1,590-crore tax refund against the demand.

In 2015, Cairn initiated an international arbitration to challenge retrospective taxation.

The development comes as a major setback for the Indian government after Vodafone Group Plc had won an international arbitration case against the Indian government in September.