Amount due

Cairn identifies $ 70 billion in Indian assets to be seized to recover government owed amount

Once a court recognizes Air India as the alter ego of the Indian government, Cairn can seek the seizure or seizure of its assets in the United States.

UK firm Cairn Energy has identified $ 70 billion in Indian assets overseas for potential foreclosure to recover $ 1.72 billion owed to the government – a move, if successful, will put India into action. alliance with Pakistan and Venezuela, which have faced similar enforcement measures for non-payment of arbitral awards.

The assets identified range from Air India planes and ships owned by the Shipping Corporation of India, properties owned by state-owned banks and oil and gas cargoes from PSUs, three people familiar with the matter said.

These assets are found in multiple jurisdictions, they said without giving further details.

Cairn plans to move courts from the United States to Singapore for the seizure of assets in the absence of the Indian government’s refusal to honor an international arbitration award.

“The Indian government will naturally challenge such a foreclosure, but in order to save assets it may need to pledge the equivalent of the value of the assets in a financial guarantee such as a bank guarantee. The court will issue such a guarantee to India if it does not judge the merits in the Cairn case. But the bond will be forwarded to Cairn if the court finds that India has not honored its obligation, “said a source.

Cairn secured an international arbitration award – which overturned the retroactive tax levy and ordered New Delhi to return the value of the shares it had sold, dividends seized and tax refunds withheld to recover those taxes – recorded at United States, United Kingdom, France and the Netherlands. , Singapore, Mauritius, the province of Quebec in Canada, Japan and the United Arab Emirates.

Now he has started asking the courts for a declaration that the public entities are alter egos of India and that they should be held accountable for the acquittal of the arbitral award in the absence of payment by the government.

Cairn filed a lawsuit on May 14 in a New York court to have Air India recognized as India’s alter ego and that “it should be held jointly and severally liable for India’s debts, including including any judgment resulting from the recognition of the award ”.

Once a court recognizes Air India as the alter ego of the Indian government, Cairn can seek the seizure or seizure of its assets in the United States such as planes, real estate and bank accounts to recover the amount that was granted to him by the arbitral tribunal.

The ruling is similar to a court in the British Virgin Islands that ordered in December last year that hotels in New York and Paris owned by Pakistan International Airlines would be used to settle a claim against the Pakistani government by a Canadian-Chilean copper company.

Crystallex International Corp had filed a similar lawsuit to seize the property of Petroleos de Venezuela, SA (PDVSA), Venezuela’s state oil company, in Delaware a few years ago after the Latin American country did failed to pay the company $ 1.2 billion that an arbitral tribunal had ordered to pay in lieu of the 2011 seizure of gold deposits held and developed by the company.

In 2012, Elliott Management, a US hedge fund that held distressed Argentine bonds, seized a beautiful tall ship owned by the Argentine Navy. Recently, French courts ruled that a strangled creditor could seize a Congo-Brazzaville government-owned business jet while on duty at a French airport, as well as $ 30 million in a bank account in the Congo. the country’s national oil company.

While the Finance Ministry has so far not commented on Cairn’s decision, sources said India would take all necessary steps to defend itself against such “unlawful enforcement measures”.

India, they said, will challenge the ruling on the grounds that the government has challenged the arbitral award in the relevant court in The Hague and is confident that the award will be overturned.

Sources said the government has also hired a team of lawyers who are ready to defend themselves against any coercive action.

Although they maintained that neither the government nor any PSU had received such a notice, people familiar with the Cairn trial said the case was only filed on Friday and that notices would be released in due course. wanted to the authorities concerned.

The sources indicated that as such notice is received, the government / organization concerned must take all necessary measures to defend itself against “any unlawful execution”.

“Cairn is taking the necessary legal steps to protect the interests of shareholders in the absence of a resolution of the arbitration award,” said a spokesperson for the company commenting on the matter. “Cairn remains open to continuing a constructive dialogue with the Indian government to achieve a satisfactory outcome to this long-standing problem.” The Scottish company invested in the oil and gas industry in India in 1994 and a decade later made a huge oil discovery in Rajasthan. In 2006, she listed her Indian assets for BSE. Five years later, the government passed retroactive tax law and billed Cairn 10,247 crore plus interest and penalties for the reorganization related to the issue.

The state then expropriated and liquidated Cairn’s remaining shares in the Indian entity, seized dividends, and withheld tax refunds to recover part of the claim.

Cairn challenged the decision in an arbitral tribunal in The Hague, which in December awarded him $ 1.2 billion (over 8,800 crore) plus costs and interest, for a total of $ 1.725 million (12,600 crore). ₹ crore) in December 2020.

The company, which previously said the ruling was binding and enforceable under international treaty law, has since courted Indian government officials for the money. But the government did not agree to pay.

Finance Minister Nirmala Sitharaman reiterated last month that the international arbitration ruling on India’s sovereign right to taxation sets a bad precedent, but said the government was looking for the best way to resolve the issue. problem.

The government, which participated in an international arbitration by the Scottish company against retroactive taxation, has appealed the decision of the Hague-based tribunal.

Sources said the appeal does not prevent the company from seeking the seizure of Indian assets.

“It may not go for the seizure of assets in the Netherlands while waiting for the appeal, but it may go to look for assets elsewhere,” said a source.


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