Sunday, May 16, 2021

For getting its $1.2-bn arbitration, Cairn sues Air India in US

New Delhi: British oil company Cairn Energy Plc has initiated the process to seize Indian assets and has brought a lawsuit in the US against national carrier Air India to enforce the $1.2-billion arbitration award it won against the Indian government in a longstanding tax dispute.

Sources in New Delhi said that the Centre will take “all necessary steps to defend against any such illegal enforcement action”.

Cairn filed the lawsuit Friday in the US District Court for the Southern District of New York, seeking to make disinvestment-bound Air India liable for the judgment that was awarded to Cairn, Reuters reported.

The lawsuit argued that the carrier, as a state-owned company, is “legally indistinct from the state itself”.

“The nominal distinction between India and Air India is illusory and serves only to aid India in improperly shielding its assets from creditors like (Cairn),” the report quoted from the said court filing.

This comes less than a week after Cairn Energy’s chief executive Simon Thomson told the company’s shareholders that the firm was continuing “constructive engagement with the Government of India whilst at the same time taking all necessary actions to protect our rights to the award and access the value of it as early as possible”.

A query sent to Cairn Energy did not elicit a response. The Finance Ministry, the Ministry of Civil Aviation and Air India did not respond to questionnaires sent by this newspaper.

The Government had challenged in a court in The Hague the arbitration tribunal verdict that overturned its demand for back taxes from Cairn. The Permanent Court of Arbitration (PCA) at The Hague in December 2020 had ruled that the Indian government’s retrospective tax demand on Cairn Energy was “in breach of the guarantee of fair and equitable treatment”, and against the India-UK bilateral treaty.

“There are some news reports in the media that Cairn has initiated some action against a PSU to enforce the award. Government/PSU has not received any such notice. As and when any such notice is received, Government/concerned organisation shall take all necessary steps to defend against any such illegal enforcement action,” an official involved in the process said.

“The Government challenged the award in the case of Cairn in the appropriate court in the Hague and the Government is confident that the award will be set aside. The Government has also engaged a counsel team which is ready to defend it against any enforcement action if and when initiated by Cairn anywhere in the world,” the official added.

Currently, Air India flies wide-bodied planes from India to New York, Newark, San Francisco, Chicago and Washington DC in the US, and has sales offices in some of these locations.

It is also the only Indian airline to fly to these destinations The loss-making airline is also in advanced stages of being disinvested by the Government of India, with the Centre saying that multiple entities had submitted expressions of interest. This included Mumbai-based conglomerate Tata Group.

16/05/21  Pranav Mukul/Indian Express

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