(Repeats earlier story with no changes to text)
By Aditi Shah and Aftab Ahmed
NEW DELHI, Dec 23 (Reuters) - Cairn Energy CNE.L said on Wednesday it had won an international arbitration case against the Indian government over a tax dispute that had caused concern among investors over retrospective tax claims on companies.
The tribunal ruled unanimously that India had breached its obligations to Cairn under the U.K.-India Bilateral Investment Treaty and awarded Cairn damages of $1.2 billion plus interest and costs, the company said in its statement.
The amount is nearly equal to London-listed Cairn's market value of $1.3 billion as of Tuesday's close.
For India, this is the second setback after losing another international arbitration case in September against Vodafone Plc VOD.L over a $2 billion retrospective tax dispute.
The government said it will consider all options, including legal remedies. government official told Reuters that the award in Cairn's case is so big, "we don't think we can give that away without challenging it", he said, adding that a final decision will be taken by the Prime Minister's office.
"We will have to challenge both cases as we will otherwise give a wrong signal to investors," said the official, who declined to be named due to not being authorised to speak publicly.
If the government decides to appeal, it will keep the problem alive and create nervousness for investors, said Anuradha Dutt, partner at Indian law firm DMD, which represented Vodafone in its case against India.
"Tax certainty and rule of law are very critical for investors to come to a destination and both have been violated here which will have an impact, especially at a time when India wants to attract investment," she said.
Dutt said the government must talk directly with Vodafone, Cairn and Vedanta on how best to settle the matter.
Cairn took the case to arbitration in 2015 to fight against a demand in 2014 from Indian authorities for 102 billion rupees ($1.4 billion) in taxes it said were owed on capital gains related to the 2007 listing of its local unit.
The Indian government seized the remaining shares in 2014 after the tax complaint was made, as well as dividends Vedanta owed to Cairn Energy for its holdings in the Indian firm.
In 2018, Cairn Energy said it would write down the value of its investment in Vedanta after Indian tax authorities sold $216 million worth of its shares in the Indian mining company.
Shares in Vedanta ended the day 8.2% higher on Wednesday.
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