Cairn to move US, Singapore courts to reclaim $1.72 bn from Indian govt
17 May 2021
UK’s Cairn Energy is planning to move courts in the US or Singapore with a list of overseas India assets to be seized for recovering an internationalarbitration award that the Indian government has refusws to honour.
Reports citing sources said the assets identified by the UK company include Air India's planes, vessels belonging to the Shipping Corporation of India, properties of state-owned banks, oil and gas cargoes of PSUs etc.
Naturally, the Indian government will challenge such seizure but to save the assets it may have to provide money equivalent to the value of assets as security such as bank guarantee. The court will return the amount if it does not find merit in Cairn's case. But the surety will be passed on to Cairn if the court finds that India had failed to honour its obligation, report cited a source as saying.
Cairn is moving on the strength of an international arbitration award that overturned the levy of retrospective taxes and ordered the Indian government to return the value of shares it had sold, dividends seized and tax refunds withheld to recover such taxes.
Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it $1.2 billion plus costs and interest, which totals $1.725 million as of December 2020.
Now it has reportedly started approaching overseas courts to make India liable for discharge of the arbitration award.
Cairn on Friday filed a lawsuit in a New York court to get Air India recognised an entity owne by the Indian government and that "it should be held jointly and severally responsible for India's debts, including from any judgment resulting from recognition of the award".
India’s finance ministry has so far not commented on the Cairn move, but India is sure to take all necessary steps to defend against any such "illegal enforcement action".
The Indian government has challenged the arbitration award in the appropriate court in The Hague and, sources say, it is confident that the award will be set aside.
Sources said the government has also engaged a counsel team which is ready to defend against any enforcement action.
While they maintained that neither the government nor any PSU has received any such notice, people aware of the Cairn lawsuit said the case has been brought only on Friday and notices in due course will come to the concerned authorities.