AIR INDIA ASKS US COURT TO DISMISS CAIRN PETITION

NEW DELHI: Air India has asked a New York court to dismiss a petition filed by Britain’s Cairn Energy for seizure of its assets to enforce $1.2 billion arbitral awards against the Indian government, saying the litigation was premature as an appeal against the arbitration award was still pending.

The petition by the airline said the New York district court lacks jurisdiction to adjudicate a “mere hypothetical question” or one that depends upon contingent future events that may or may not occur.

Cairn first moved a court in the US district court for the District of Columbia seeking confirmation of the arbitration award and then filed a petition in the New York court to seek declaration of Air India as “alter ego” of the Indian government and so it should be made liable to pay the $1.26 billion arbitral award.

An international arbitration tribunal in December last year set aside the levy of capital gains tax, using a 2012 retrospective legislation, on a 2006 reorganization of India business that Cairn carried before listing it on local stock exchanges. It ordered India to return the value of shares seized and sold, dividend confiscated and tax refund withheld to enforce levy.

With India refusing to pay, Cairn moved courts in the US.

“Cairn’s petition to confirm the Award is pending in the District Court for the District of Columbia,” Air India said in the August 23 petition seen by PTI .It went on to state that the Indian government has filed before a court in The Hague—the seat of the international arbitration tribunal—a Motion to Stay and a Motion to Dismiss the award.

“In effect, the Complaint (by Cairn Energy) is a premature enforcement action dressed up as a declaratory judgment action, invoking this Court’s federal jurisdiction to get a head start on executing the Award before the D.D.C. has had the opportunity to address India’s immunity defenses and its claims that the Award is not subject to enforcement under the Convention,” Air India said.