Britain’s Cairn Energy Plc has secured a French court order to seize about 20 Indian government properties in France to recover a part of $1.7 billion arbitration award, sources said on Thursday.
According to a report in London's Financial Times, Cairn Enery said said it has frozen Indian state-owned properties in Paris, marking an escalation of the fight between the Scottish oil producer and the Indian government.
On June 11, the French court had ordered Cairn Energy’s take-over of Indian government properties, mostly comprising flat; and the legal process got completed on Wednesday evening.
An arbitration panel had in December ordered the Indian government to return $1.2 billion plus interest and penalty to Cairn Energy after reversing a retrospective tax demand.
With Indian government not honouring the award, Cairn Energy has moved in multiple jurisdictions overseas to recover the amount due by seizing Indian government assets.
After Air India, Britain's Cairn Energy PLC had plans to target assets of state-owned firms and banks in countries from the US to Singapore as it looks to ramp up efforts to recover the amount due from the Indian government after winning an arbitration against the levy of retrospective taxes, PTI had reported earlier.
Cairn to bring lawsuits in several countries
A lawyer representing the company said Cairn will bring lawsuits in several countries to make state-owned firms liable to pay the $1.2 billion plus interest and penalties that are due from the Indian government.
Last month, Cairn brought a lawsuit in the US District Court for the Southern District of New York pleading that Air India is controlled by the Indian government so much that they are 'alter egos' and the airline should be held liable for the arbitration award.
A three-member international arbitration tribunal that consisted of one judge appointed by India had unanimously in December overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.
The government of India, despite participating in the arbitration proceeding over four years, has not accepted the award and has filed a 'setting aside' petition in a court in Netherlands - the seat of the arbitration.
Pressed by its shareholders - some of whom are biggies of the financial world, Cairn is seeking to recover the award by confiscating assets and bank accounts of state-owned entities in foreign countries.
"The (arbitration) award is registered and either recognised or soon to be recognised in several countries, and Cairn will continue to ramp up enforcement proceedings around the world to pursue the value of the award for its international shareholders," he said.
He, however, refused to either name the companies that Cairn will target or the countries where lawsuits will be filed.
Cairn has already got the arbitration award registered and recognised in the US, the UK, Netherlands, France, Canada and Singapore.
In case of Air India, the national flag carrier has time till mid-July to file a plea contesting Cairn lawsuit, sources aware of the matter said.
The airline, which is in the process of being privatised, is likely to argue that it is a separate entity and not the alter ego of the Indian government and cannot be forced to pay for any liability of the government, they said.
Cairn has identified $70 billion of Indian assets overseas for potential seizure to collect award, which now totals to $1.72 billion after including interest and penalty.
The assets identified range from Air India's planes to vessels belonging to the Shipping Corporation of India, and properties owned by state banks to oil and gas cargoes of PSUs, the sources said.
Once a court recognises a state-owned firm or bank as the alter ego of Indian government, Cairn can seek attachment or seizure of its assets including bank accounts to recover the amount it was awarded by the arbitration tribunal.
(With PTI inputs)