The government on Tuesday 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 USD 1.72 billion from New Delhi after winning an arbitration against retro tax.
Minister of State for Finance Pankaj Chaudhary in a written reply to a question in the Rajya Sabha said the government has filed an appeal against an international arbitration tribunal overturning levy of Rs 10,247 crore 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, PTI had earlier this month reported that the 20-odd centrally located properties mostly comprise flats, valued at more than EUR 20 million.
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 central Paris. The legal formalities for the same were completed earlier this month.
A three-member international arbitration tribunal that consisted of one judge appointed by India, had in December last year unanimously overturned the levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such 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.
The government has not accepted the award and 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," he said.
On action initiated to protect the interest of the country, he said an international law firm, with relevant experience, 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," he said without giving details.
With its shareholders - who include the biggies of the global financial world - egging it to get the money back, Cairn has got the arbitration award registered in countries such as the US, the UK, Canada, Singapore, Mauritius, France and the Netherlands. It has since started seeking enforcement action.
It has identified USD 70 billion of Indian assets overseas for the potential seizure to collect the award, which now totals to USD 1.72 billion after including interest and penalty.
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.
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 BSE. Five years after that the government passed retroactive tax law and billed Cairn Rs 10,247 crore 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.
Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it USD 1.2 billion (over Rs 8,800 crore) plus costs and interest, which totals USD 1.725 million (Rs 12,600 crore) as of December 2020.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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