The British oil company Cairn Energy Plc has initiated the process of seizure of Indian assets and filed a lawsuit in the United States against the national carrier Air India for the execution of the arbitration award of $ 1.2 billion won against the Indian government in a long-running tax dispute.
Sources in New Delhi said the center would take “all necessary steps to protect against any such illegal enforcement action.”
Kern filed a lawsuit Friday in the U.S. District Court for the Southern District of New York, trying to hold Air India responsible for Kern’s decision, Reuters reported.
The case alleges that the carrier, as a state-owned company, is “legally indistinguishable from the state itself”
“The nominal distinction between India and Air India is illusory and serves only to assist India in improperly protecting its assets from creditors such as (Kern),” the report quoted the statement as saying.
This comes less than a week after Cairn Energy CEO Simon Thomson told the company’s shareholders that the company continues to “constructively engage with the Government of India while taking all necessary action to protect our rights to the prize and access to its value as early as possible. “
An inquiry sent to Cairn Energy did not respond. The Ministry of Finance, the Ministry of Civil Aviation and Air India did not reply to questionnaires sent by this newspaper.
The government challenged in a court in The Hague the decision of the arbitral tribunal, which overturned its request for a tax refund from Kern. The Permanent Court of Arbitration (PCA) in The Hague ruled in December 2020 that the Indian government’s request for a retrospective of Cairn Energy “violates the guarantee of fair and equitable treatment” and against the bilateral agreement between India and the United Kingdom.
“There are some news reports in the media that Kern has taken some action against PSU to implement the award. The government / PSU has not received such notification. When and when such notification is received, the government / organization concerned shall take all necessary steps to protect against any such illegal enforcement action, ”said an official involved in the process.
“The government has challenged the award in the Cairn case in the relevant court in The Hague and the government is confident that the award will be revoked. The government has also hired a team of lawyers who are ready to defend it against any enforcement action if and when it is initiated by Kern anywhere in the world, “the official added.
Air India currently flies wide-ranging aircraft from India to New York, Newark, San Francisco, Chicago and Washington in the United States, and has sales offices in some of these locations.
It is also the only Indian airline that flies to these destinations. The profitable airline is also at an advanced stage of disinvestment by the Indian government, with the Center saying a number of organizations have applied for interest. This includes the Mumbai-based conglomerate Tata Group.
There are precedents for companies moving to seize state foreign assets to enforce an arbitration award. In 2019, the US firm ConocoPhillips ordered US courts to seize assets of Venezuelan state oil company PDVSA to recover $ 2 billion won in arbitration against the takeover of Venezuela’s assets in 2007. PDVSA then paid its contributions to ConocoPhillips.
Similarly, a freight agent at Amsterdam’s Schiphol Airport hijacked a Jet Airways plane in 2019 for unpaid dues. Also earlier this year, a Malaysian court allowed Dublin-based lessor AerCap to seize a Boeing 777 aircraft owned by Pakistan International Airlines in Kuala Lumpur for unpaid contributions.