Cairn has identified $70 billion worth of Indian assets overseas for the potential seizure to collect the award, which now totals to $1.72 billion after including interest and penalty.
Air India is controlled by the Indian government so much that they are “alter egos”, Cairn had said in the lawsuit filed with the US District Court for the Southern District of New York. The court should hold the airline company liable for the arbitration award, the company had said.
A three-member international arbitration tribunal that consisted of one judge appointed by India had unanimously in December overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.
The Government of India, despite participating in the arbitration proceeding over four years, has not accepted the award and has filed a ”setting aside” petition in a court in The Netherlands: the seat of the arbitration.
With Cairn seeking to recover the award from State-owned entities such as Air India, the government has said it will contest any enforcement.
Air India has time till mid-July to file a plea contesting Cairn lawsuit, three sources aware of the matter said.
The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006 it listed its Indian assets on the BSE. Five years after that the government passed a retroactive tax law and billed Cairn Rs 10,247 crore plus interest and penalty for the reorganisation tied to the flotation. The State then expropriated and liquidated Cairn’s remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand.
Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it $1.2 billion (over Rs 8,800 crore) plus costs and interest, which totals $1.725 million (Rs 12,600 crore) as of December 2020.
