David Nisbet: Lessons Learnt – Cairn Energy’s Arbitration with the Government of India

Audere International was delighted to host a talk last month (March 2022) by Cairn Energy (now renamed Capricorn Energy PLC) Director of Corporate Affairs, David Nisbet, who provided unique insights into Cairn’s recent successful arbitration with the Government of India (“GoI”).

Whilst there were multiple factors that eventually led to GoI agreeing to settle $1.06 billion after 8 long years of dispute, David credited the outcome to four crucial aspects Cairn sought to embody throughout the process:

1. Patience and perseverance: Cairn recognised the matter would not be solved from the UK and instead visited India and the United States over 80 times having hundreds of face-to-face meetings. Whilst discussions were not always fruitful, Cairn’s persistence and tenacity eventually yielded results.

2. Maintaining respect towards the Indian government: From the outset, Cairn never created controversy in public or criticised the Indian government. On the contrary, David spoke with great respect for the GoI and it is his belief that maintaining close relations with key ministries in particular was paramount. Cairn’s approach ensured negotiations remained amicable and the narrative remained focused.

3. Developing strong relationships in country and with key stakeholders globally: David emphasised the role relationships played in Cairn’s success. Within India, trust had to be developed between all parties, to create a solid foundation for a working dialogue, which he expressed is vital for resolving any dispute. Internationally, key contacts, ensured the campaign maintained momentum through directly discussing the case with key personnel and where appropriate, providing independent and objective advice and intelligence. (Audere’s Strategic Advisor, Alan Rosling, was among many people who did this)

4. Not relying solely on a legal strategy in isolation: This was crucial because it avoided the legal battle being taken out of context and, as is so often the case, breaking down into legal wrangles, controversy and ill-feeling.  Instead, Cairn maintained close relations and worked the legal strategy in parallel.

Cairn’s experience aptly demonstrates foreign entities’ ability to successfully navigate legal disputes with sovereign nations. As such, it should be seen as a positive example of due process, and that with a clear strategy and timely intelligence, foreign companies can overcome obstacles in foreign jurisdictions.

If you would like more information on the case, please click on the link.

Ned Jacobs is a Senior Research Analyst at Audere International.