Cairn Energy Sues Air India To Enforce $1.2 Billion Arbitration Award: Reuters
Cairn Energy has sued Air India to enforce a $1.2 billion arbitration award it won in a tax dispute against India in December last year, according to a Reuters report.
A lawsuit, examined by Reuters, was filed on Friday in the U.S. District Court for the Southern District of New York, that seeks to make Air India liable for the judgement that was awarded to Cairn. It argues that India’s flagship carrier is a state-owned company and hence 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 says quoting the filing.
In December, India had lost arbitration proceedings and was directed to pay over $1.2 billion to Cairn Energy. The case pertains to an initial tax demand of Rs 10,247 crore on Cairn U.K. Holdings Ltd. for alleged capital gains it made in the 2006 business reorganisation of its Indian holdings.
Also read: Why India Lost To Cairn Energy: BQ Exclusive
With penalties and interest added the tax claim has risen to over Rs 22,000 crore, part of which the tax department recovered via sale of Cairn assets they had seized. That, alongwith damages, is what the arbitral award has ordered be paid back.
Cairn has moved courts in the U.S., U.K., Canada, France, Singapore, the Netherlands and three other countries to register enforce its arbitral award. The move opened the possibility of the British firm seizing Indian assets in those countries if the government does not pay.