Cairn, AI seek stay on NY court proceedings
Cairn Energy and Air India have jointly asked a New York federal court to stay further proceedings in the British firm’s US lawsuit targeting the airline for enforcement of a $1.2-billion arbitral award. The move follows the government enacting a law to scrap retrospective taxation in the country.
Cairn Energy and Air India have jointly asked a New York federal court to stay further proceedings in the British firm’s US lawsuit targeting the airline for enforcement of a $1.2-billion arbitral award.
The move follows the government enacting a law to scrap retrospective taxation in the country, which in effect will result in withdrawal of the ~10,247 crore tax demand on Cairn, according to court documents reviewed by PTI.
The British company had won an international arbitration award against levy of such taxes and sought to take over Air India assets when the government refused to honour the award and pay it $1.2 billionplus interest and penalty.
But, last month, the government enacted the Taxation Laws (Amendment) Act, 2021, that scraps all such retrospective tax demands and has agreed to refund Rs 7,900 crore it had seized from Cairn to enforce such demand.
Cairn has indicated that the refund, without interest and penalty, was acceptable to it — opening an avenue to settle the seven-year-old dispute.
Cairn and Air India in a joint request to US District Judge Paul Gardephe on September 13 stated that a stay on proceedings would give them “additional time to evaluate the effects and implications” of legislation that repealed the retroactive tax.
In return for the Rs 7,900 crore, Cairn would drop lawsuits threatening courtordered seizures of Indian government property abroad.
One of those suits was filed in May against state-owned Air India, which Cairn has said should be considered alter ego of the Indian government.
“The implementing regulations are in the rulemaking process and will take some time,” the two said in the petition seeking extension of the October 21 deadline for the presentation of case papers and initial pretrial conference on October 28.
They requested the court to “stay any further proceedings in this matter through October 31, 2021, and reschedule the initial pretrial conference and, respectively, the deadline for the parties to submit their Joint Pretrial Letter and Proposed Case Management Plan, for new dates in November 2021.”