Udayavni Special

Cairn begins process to seize Indian overseas assets to recover $1.7 bn


Team Udayavani, May 15, 2021, 3:47 PM IST

New Delhi: UK’s Cairn Energy Plc has brought the lawsuit in the US to pierce the corporate veil between the Indian government and its owned flag carrier Air India to seize its overseas assets to recover USD 1.7 billion it has been awarded by the international arbitration tribunal for being taxed retroactively.

The firm first moved courts in the US, UK, Canada, France, Singapore, the Netherlands, and three other countries to register the December 2020 arbitration tribunal ruling that overturned the Indian government’s Rs 10,247 crore demand in back taxes and ordered New Delhi to return the value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand.

Now, the firm has begun bringing lawsuits in the US and other countries to pierce the corporate veil between the Indian government and its owned companies such as in oil and gas, shipping, airline, and banking sectors, to seize their overseas assets to recover the money awarded, three sources with direct knowledge of the development said.

In the first instance, it filed a lawsuit on May 14 in the US District Court for the Southern District of New York, seeking to make Air India liable for the judgment. The lawsuit argued that Air India as a state-owned company is “legally indistinct from the state itself.”

PTI had on March 28, 2021, reported that Cairn will bring lawsuits to pierce the corporate veil to establish that certain state-owned entities are India’s alter ego under Bancec for enforcing the arbitration award.

The Bancec guidelines deal with determining when a judgment against a foreign state is enforceable against its agencies.

The lawsuit is similar to the one brought by Crystallex International Corp to attach the property of Petroleos de Venezuela, S.A (PDVSA), the state-owned oil company of Venezuela, in Delaware a couple of years back after the Latin American country failed to pay the firm USD 1.2 billion that an arbitration tribunal had ordered to pay in place of the 2011 seizing gold deposits held and developed by the firm.

Sources in the government said India will take all necessary steps to defend against any such illegal enforcement action.

It will contest the move on grounds that the government has challenged the arbitration award in the appropriate court in The Hague and it is confident that the award will be set aside.

Sources said the government has also engaged a counsel team that is ready to defend against any enforcement action.

Indian assets across several jurisdictions have been identified that Cairn will be seeking to seize to enforce the award, sources said.

Cairn is pulling out all the stops to recover the damages, including hiring a team of asset recovery experts.

Sources said the assets that can be attached could range from airplanes to ships, to oil and gas cargoes and bank accounts of state-owned entities.

Cairn had previously said the money ultimately belongs to its shareholders — which include large investors such as BlackRock, Fidelity, and Franklin Templeton, and the ramifications of India not honoring the award will run across the international investment community more widely.

Its management team has held three rounds of face-to-face and one video conferencing discussion with top officials in the finance ministry.

India has appealed against the arbitration award because taxation-related matters are not covered in its bilateral investment treaty with the United Kingdom under which the case was filed, and therefore the arbitration tribunal does not have the jurisdiction to rule on the matter, sources said.

However, the appeal in the Dutch court does not bar Cairn from taking action in other jurisdictions to recover the full amount of the arbitral award which totals USD 1.7 billion after including interest and cost as of December 2020.

The company will seek to establish that state-owned entities/firms are India’s alter ego under Bancec regulations, that is, to pierce the veil between the Indian government and them.

‘Piercing the corporate veil is a means of imposing liability on an underlying cause of action against a third party which would not otherwise be liable.

By this, Cairn will seek to pierce the veil to shift liability for payment of an existing judgment against the Republic of India to a third party that is not otherwise liable, that is state-owned firms or banks.

Government/ PSU has not received any such notice. As and when any such notice is received, the government/concerned organization shall take all necessary steps to defend against any such illegal enforcement action, a government source said.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

13 workers killed in iron mine accident in China

BSY condoles death of former cricketer B Vijayakrishna

Indian Railways to restore services of 50 trains, including Duronto, Shatabdi

Uber’s Bengaluru engineering team leads tech for third-party cab booking in UK

Anti-inflammation drug may effectively treat COVID-19 complications in children: Study

PM should acknowledge his mistakes, seek expert help to rebuild India: Rahul

CBSE will adopt 30:30:40 formula for evaluation of marks of class 12 students: Centre to SC



Related Articles More

COVID-19 has shone a light on how globalisation can tackle inequality

Microsoft gives more power to chief Satya Nadella with board election

Jio tops 4G chart with 20.7 mbps download speed in May, Vodafone Idea in upload: Trai

Digital adoption rising but privacy, security remain top concern among Indian users, states IBM survey

Ashok Leyland arm acquires electric vehicles maker Switch Mobility Automotive

MUST WATCH

Crocodile eats cow on the shores of Krisahna river

Udayavani 16-JUN-2021 News Bulletin

100 % sure that I was targeted in drugs case, says Ragini Dwivedi

Baby Elephant Operates Hand Pump on Its Own to Drink Water

Suresh Shetty Gulme | Success Story of Modern Cow Dairy Farming | Kannada

Latest Additions

‘Biased’: Asaram Bapu followers question actor Pearl V Puri’s release on bail in just 11 days

13 workers killed in iron mine accident in China

SC refuses to stay order for removing encroachment in Aravali forest area in Faridabad

Sonia taken Covid jabs, govt should inoculate all instead of creating non-issues: Cong

BSY condoles death of former cricketer B Vijayakrishna

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.