Delhi confirms ‘freeze on assets’ in Paris
INDIA on Tuesday (27) confirmed that a French court has ordered the freezing of certain Indian assets in Paris on a petition by Britain’s Cairn Energy, which is seeking to recover $1.72 billion (£1.24bn) from New Delhi after winning an arbitration against retro tax.
Last year an international arbitration tribunal ruled that India should pay Cairn Energy $1.2bn (£866.7m) in a complex tax dispute. Cairn says it is also owed $500 million (£361m) in interest.
India’s minister of state for finance Pankaj Chaudhary, in a written reply to a question in the parliament’s upper house, said the government has filed an appeal against an international arbitration tribunal to overturn a levy of `102.47bn (£1bn) in back taxes on Cairn Energy.
“Yes sir, an order has been passed by a French Court freezing certain Indian government properties in the case pertaining to Cairn Energy,” he said.
While the minister did not identify the properties, reports said the 20-odd centrally located properties mostly comprise flats, valued at more than €20m (£17m).
The French court, Tribunal Judiciaire de Paris, on June 11 agreed to Cairn’s application to freeze (through judicial mortgages) residential real estate owned by the Government of India in Paris. The legal formalities were completed earlier this month.
A three-member international arbitration tribunal, with one judge appointed by India, unanimously overturned in December last year the levy of taxes on Cairn retrospectively and ordered the refund of shares sold, dividends confiscated and tax refunds withheld to recover the demand.
“Arbitral tribunal (which had its seat in The Hague) pronounced its award on 21st December 2020 in favour of Cairn Energy Plc and Cairn UK Holdings Ltd (CUHL),” Chaudhary said.
Indian has not accepted the award and the government has filed a “setting aside” petition in a court in the Netherlands – the seat of the arbitration.
“Appeal against the said award has been filed in the Hague Court of Appeal on March 22, 2021,” the minister said. He added that an international law firm has been engaged for handling enforcement proceedings.
“In consultation with its counsel team, the government is taking all appropriate legal steps to protect its interest,” Chaudhary said, without giving details.
Earlier this year, Cairn Energy put several Manhattan properties owned by Air India in its crosshairs when it filed a lawsuit in New York to recognise the airline as “legally indistinct” from the Indian government.
The firm reportedly disclosed it had identified $70bn (£50.4bn) in overseas assets owned by the Indian state that could potentially be seized.
Similar lawsuits are likely to be brought in other countries, primarily with high-value assets. The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006, it listed its Indian assets on the Bombay Stock Exchange.
Five years after that the government passed retroactive tax law and billed Cairn `102.470bn plus interest and penalty for the reorganisation tied to the flotation.
The government then expropriated and liquidated Cairn’s remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand.