Cairn sets eyes on Indian assets
Begins process to recover $1.7 billion
New Delhi, May 15: UK’s Cairn Energy Plc has brought lawsuit in the US to pierce the corporate veil between the Indian government and its owned flag carrier Air India so as to seize its overseas assets to recover $1.7 billion it has been awarded by international arbitration tribunal for being taxed retroactively.
The firm first moved courts in the US, UK, Canada, France, Singapore, the Netherlands and three other countries to register the December 2020 arbitration tribunal ruling that overturned the Indian government’s ` 10,247 crore demand in back taxes and ordered New Delhi to return the value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand.
Now, the firm has begin bringing lawsuits in the US and other countries to pierce the corporate veil between the Indian government and its owned companies such as in oil and gas, shipping, airline and banking sectors, to seize their overseas assets to recover the money awarded, three sources with direct knowledge of the development said.
In the first instance, it filed a lawsuit on May 14 in the US District court for the Southern District of New York, seeking to make Air India liable for the judgment.
● NOW, THE firm has begin bringing lawsuits in the US and other countries to pierce the corporate veil between the Indian government and its owned companies such as in oil and gas, shipping, airline and banking sectors, to seize their overseas assets to recover the money awarded, three sources with direct knowledge of the development said.
The lawsuit argued that Air India as a state-owned company is “legally indistinct from the state itself ”. PTI had on March 28, 2021 reported that Cairn will bring lawsuits to pierce the corporate veil to establish that certain stateowned entities are India's alter ego under Bancec for enforcing the arbitration award.
The Bancec guidelines deal with determining when a judgment against a foreign state is enforceable against its agencies. The lawsuit is similar to the one brought by Crystallex International Corp to attach property of Petroleos de Venezuela, S.A (PDVSA), the stateowned oil company of Venezuela, in Delaware couple of years back after the Latin American country failed to pay the firm $1.2 billion that an arbitration tribunal had ordered to pay in lieu of the 2011 seizing deposits held and by the firm.
Sources in the government said India will take all necessary steps to defend against any such “illegal enforcement action”. It will contest the move on grounds that the government has challenged the arbitration award in the appropriate court in The Hague and it is confident that the award will be set aside.
Sources said the government has also engaged a counsel team which is ready to defend against any enforcement action. Indian assets across several jurisdictions have been identified that Cairn will be seeking to seize to enforce the award, sources said.
Cairn is pulling out all the stops to recover the damages, including hiring a team of asset recovery experts. Sources said the assets that can be attached could range from airplanes to ships, to oil and gas cargoes and bank accounts of state-owned entities. Cairn had previously said the money ultimately belongs to its shareholders — which include large investors such as BlackRock, Fidelity and Franklin Templeton, and the ramifications of India not honouring the award will “run across the international investment community more widely”.
gold developed