AI can contest lawsuit till mid-july

NEW DELHI: Air India has time till mid-july to challenge the lawsuit filed by the British oil major Cairn Energy Plc demanding that the airline be compelled to pay a $1.26 billion arbitration award, said three people familiar with the matter. The airline, which is in the process of being privatized, is likely to argue that it is a separate entity and not an ‘alter ego’ of the Indian government as claimed by Cairn in its lawsuit filed with a US federal court. Therefore, Air India cannot be forced to pay for any liability of the government, said the three people mentioned earlier.

Air India spokesperson declined to comment on the story.

A three-member international arbitration tribunal, including a judge appointed by India, had unanimously overturned the levy of taxes on Cairn retrospectively and ordered a refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.

The government of India has not accepted the award and has filed a ‘setting aside’ petition in a court in Netherlands—the seat of the arbitration.

With Cairn seeking to recover the award from state-owned entities such as Air India, the government has said it will contest any enforcement.

Cairn has identified $70 billion of Indian assets overseas for potential seizure to collect $1.72 billion due from the Indian government.

The assets identified include Air India’s planes, vessels belonging to the Shipping Corporation of India and properties owned by state-owned banks to oil and gas cargoes of public sector undertakings, PTI reported citing three people familiar with the matter.