Cairn Energy identifies overseas Indian assets for seizure

NEW DELHI: British oil and gas major Cairn Energy Plc told shareholders on Tuesday that it has identified overseas Indian sovereign assets that can be seized if the Indian government does not adhere to an international arbitration tribunal ruling ordering India to pay Cairn $1.2 billion in damages, in addition to costs and interest. According to the company, the total due at the year-end was $1.7 billion.

The international arbitration tribunal had found in Cairn’s favour last December, observing that India had breached its obligations under the UK-India Bilateral Investment Treaty when it seized Cairn assets in India to set off against a retrospective tax demand. While India has not officially challenged the tribunal’s order yet, finance minister Nirmala Sitharaman had said on Friday that it “was her duty” to challenge the order if it questioned India’s right to tax.

Top Cairn executives have already met with top government officials over the issue, though neither party has indicated that any progress has been achieved.  On Tuesday, Cairn Energy said in its annual earnings announcement that the award was enforceable in over 160 countries that have signed and ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. “Cairn has already taken steps to have the Award recognised in certain major jurisdictions in which Indian sovereign assets have been identified,” the statement added. 

Cairn has, so far, confirmed and registered the award in courts across several major legal jurisdictions—United Kingdom, United States, Canada, France, and the Netherlands, and reports say it has begun this process in Singapore, Japan, the Cayman Islands, and the United Arab Emirates.

Once this process is complete, Cairn may move to enforce the award on the identified Indian assets if negotiations fail. “We have engaged with the Government of India… and we are pursuing all avenues to protect our shareholders’ rights to the value of the award,” noted Simon Thomson, Chief Executive, Cairn Energy PLC. “Cairn’s engagement with the GoI… will continue in parallel...,” the company said.