Cairn Energy has filed a lawsuit against Air India in a US court in order to enforce a $1.2 billion arbitration award it received against India in a tax dispute case.
Since the arbitration award, Cairn Energy has been identifying Indian assets in other countries in order to have the award enforced. Air India, cash held by state-run banks abroad, and ships were among the assets listed.
The decision to sue Air India puts pressure on India to pay the $1.2 billion plus interest and costs awarded to the British company by an arbitration tribunal in December. The body ruled that India had violated an investment treaty with the United Kingdom and that New Delhi was obligated to pay.
The Government Responds To Cairn Energy’s Decision.
In response to Cairn Energy’s move to sue Air India in a US court, central government sources stated that neither the government nor Air India had received any notice of this.
According to the sources, the government has challenged the arbitration award in The Hague’s appropriate court and is “confident that the award will be set aside.”
Aside from that, India Today TV has learned that the government has hired a legal team that is prepared to defend against any enforcement action initiated by Cairn Energy anywhere in the world.
What exactly is this arbitration award?
Cairn Energy was awarded more than $1.2 billion in damages, plus interest and costs, in a long-running dispute with the Indian government over its retrospective tax claims in December 2020.
While India has filed a petition, the London-listed firm has officially started identifying Indian assets abroad, which include bank accounts, that could have been seized if a settlement is not attained.
According to Reuters, Cairn Energy has filed a claim against India in courts in the United States, the United Kingdom, France, the Netherlands, Singapore, and Quebec. These actions may “make it easier to seize assets and enforce the arbitration award.”
According to Reuters, “earlier this week, a guidelines was sent to nation banks to withdraw money from their bank account.” According to reports, the guidelines was issued by a finance ministry.
A nostro account is a bank’s account held at another bank in another jurisdiction in the currency of that jurisdiction. These accounts are used to settle international trade and other foreign exchange transactions.
India has filed a petition against with the arbitration award.
According to India Today TV, India will file an appeal against the arbitration award that favoured Cairn Energy.
Government sources told India Today TV that “just in case enforcement proceedings are initiated, India is confident to address them and will vigorously defend its interests and sovereign rights.”
Courts in five countries, including the United States and the United Kingdom, have recognised an arbitration award ordering India to return $1.4 billion to Cairn Energy, opening the door for the British oil company to seize Indian assets in these countries.
