Wednesday, February 03, 2021

New Delhi mulls steps to avoid Air India aircraft seizure

In order to avoid Air India having its assets seized in a long-running corporate tax case between the Indian government and Cairn Energy over a USD1.2 billion award, Delhi is considering giving away some of its oilfields, sources told the Business Standard newspaper on January 31.

Last week, the Edinburgh-based energy firm threatened to seize Indian state assets following the award for damages in a December 2020 ruling at the Permanent Court of Arbitration in The Hague, with possible targets including those owned by public-sector enterprises such as Air India.

Sources told the BBC that Cairn had started identifying assets it could seize if India did not comply and that these could include ships as well as aircraft.

Cairn Energy filed the case after income tax officials seized its 10% stake in Cairn India in 2014 following a corporate reorganisation. The tribunal in The Hague ruled unanimously that Delhi had violated the UK-India bilateral investment treaty, ordering the government to immediately pay the award plus interest and costs.

The government has so far given no indication as to whether it intends to honour the verdict.

“The award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place,” Cairn warned in a letter to Delhi.

Aware of how a PIA - Pakistan International Airlines B777-200(ER) was abruptly impounded in Malaysia in January over a UK court dispute with a lessor, the cash-strapped Indian government may suggest that Cairn take control of infrastructure such as the Ratna and R-Series offshore oilfields of the Barmer oilfield in Rajasthan, sources told the Business Standard.

No major oil and gas discoveries have been made in India in the last seven years since the Cairn-Delhi dispute erupted.

In related news, Singapore Airlines (SQ, Singapore Changi) has declined the opportunity to partner Tata Sons in its bid for Air India, unnamed sources have told the Economic Times newspaper. Tata had hoped to make its bid via Vistara (UK, Delhi Int'l), its joint venture with the Singaporean carrier, but Singapore has reportedly waived its no-compete clause, allowing Tata to make a solo bid.

03/02/21 ch-aviation

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