Cairn Will Move to Seize Indian Assets to Enforce Tax Triumph

(Bloomberg) -- Cairn Energy Plc will push authorities to impound Indian assets around the world if the South Asian nation declines to honor an arbitration ruling in a $1.2 billion tax dispute.

An international arbitration tribunal last month said India’s tax claim was not valid and asked Prime Minister Narendra Modi’s government to return the money to Cairn Energy.

The ruling is final and binding, and failure to comply would breach the U.K.-India bilateral investment protection treaty and other international rules, Cairn Energy’s Chief Executive Officer, Simon Thomson wrote in a letter addressed to the Indian High Commissioner Gaitri Issar Kumar in London, and reviewed by Bloomberg News.

“As India is a signatory to the New York Convention, the award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place,” according to the letter, referring to the 1959 Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

India’s foreign ministry didn’t immediately respond to an email seeking comment on the letter and its contents. Cairn declined to comment.

While Cairn didn’t mention any Indian asset in its letter, The Hindu newspaper earlier reported citing people it didn’t identify, that assets could include bank accounts of its diplomatic missions, non-diplomatic premises, planes of state carrier Air India and state-owned ships in the U.K., Netherlands, France, Canada and the U.S.

Cairn Energy has asked the Indian government for an early indication of implementing the arbitration award, well before the announcement of its full year earnings on March 9 for clarity of its shareholders, according to the letter.

The U.K. oil explorer received the tax claim from Indian authorities in March 2015 over a restructuring carried out in 2006 while preparing for an initial public offering of Cairn India. The tax authorities seized 10% of Cairn India’s shares, then valued at about $1 billion, according to information on Cairn Energy’s website.

The Edinburgh-based company filed a dispute under the U.K.-India Investment Treaty and sought international arbitration that started later in 2015 for the losses over expropriation of its investments in India from the minority holding.

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