New Delhi, May 16
British company Cairn Energy has identified $70 billion in Indian assets abroad for possible seizure to collect $1.72 billion due from the government. If successful, India will be joined with Pakistan and Venezuela, which have faced similar enforcement actions for non-payment of arbitral awards.
Eyes Air Indias aircraft, SCI ships
- The assets identified range from Air India aircraft to ships owned by the Shipping Corporation of India
- Cairn is also eyeing land owned by state banks for oil and gas shipments of PSUs, officials said
- The British firm plans to seize the assets to recover $1.72 billion from the Indian government
The assets identified range from Air India planes to Shipping Corporation of India ships and properties owned by state banks to oil and gas cargoes from PSUs, three people familiar with the matter said.
Those assets are located in multiple jurisdictions, they said, without giving further details. Cairn plans to move US courts to Singapore to seize the assets as the Indian government refuses to honor an international arbitration award.
“The Indian government will of course contest such a seizure, but to salvage the assets it may need to pledge money equal to the assets’ value in a financial security such as a bank guarantee. The court will return such a guarantee to India if it finds no merit in Cairns’ case. But the bond will be passed on to Cairn if the court finds India has failed in its commitment,” a source said.
Cairn has obtained an international arbitral award overruling the collection of retrospective taxes and requiring New Delhi to return the value of shares sold, confiscated dividends and tax refunds withheld to recover such taxes, registered in US, UK, France, Netherlands, Singapore , Mauritius, the Canadian province of Quebec, Japan and the United Arab Emirates.
Now it has started moving courts to get a declaration that state-owned companies are alter egos of India and should be held liable for exonerating the award if the government fails to make payments.
Cairn filed a lawsuit in a New York court on May 14 to have Air India recognized as India’s alter ego and that “it should be held jointly and severally liable for India’s debts, including any judgments resulting from the acceptance of the arbitration award.” result”.
Once a court recognizes Air India as an alter ego of the Indian government, Cairn can seek garnishment or seizure of its assets in the US, such as aircraft, immovable property and bank accounts, to recover the amount awarded to it by the arbitration panel. —PTI