Govt weighs options as Cairn wins Paris assets - Hindustan Times
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Govt weighs options as Cairn wins Paris assets

ByRajeev Jayaswal, , New Delhi
Jul 08, 2021 11:28 PM IST

India will “vigorously defend” any move of UK’s Cairn Energy Plc to attach Indian assets overseas, the finance ministry said.

Cairn Energy said on Thursday that it has been successful in its application to the French court, Tribunal judiciaire de Paris, to freeze (through judicial mortgages) residential real estate owned by the Government of India in central Paris in the latest chapter in the saga of a tax dispute that was settled in favour of the UK energy company by an arbitration court.

Cairn India employees work at a storage facility for crude oil at Mangala oil field at Barmer in Rajasthan.(Reuters file photo)
Cairn India employees work at a storage facility for crude oil at Mangala oil field at Barmer in Rajasthan.(Reuters file photo)

India will “vigorously defend” any move of UK’s Cairn Energy Plc to attach Indian assets overseas, the finance ministry said. The Indian government has not received any notice, order, or communication, in this regard from any French court, the ministry said in a statement. “Government is trying to ascertain the facts, and whenever such an order is received, appropriate legal remedies will be taken, in consultation with its Counsels, to protect the interests of India.”

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A Cairn spokesperson said the French court order “affects some 20 centrally located properties, belonging to the Indian Government and valued at more than $20 million Euros, as part of a guarantee of the debt owed to Cairn Energy Plc.”

Cairn has been taking legal measures to enforce an international arbitration tribunal’s award to it of $1.2 billion (plus interest and costs) since December last year.

An international tribunal on December 22, 2020 asked India to return $1.2 billion (plus interest and costs), the disputed tax amount to Cairn Energy. India contested the arbitral award in March this year.

“Government has already filed an application on March 22, 2021 to set aside the December 2020 international arbitral award in The Hague Court of Appeal. Government of India will vigorously defend its case in Set Aside proceedings at The Hague,” the finance ministry added in its statement.

The Cairn spokesperson said the move to freeze the French properties “is the necessary preparatory step to taking ownership of the properties and ensure that the proceeds of any sales would be due to Cairn.”

HT learns that some of the properties are flats used by the Indian embassy in Paris but no confirmation on this was available. External affairs ministry spokesperson Arindam Bagchi told a regular news briefing that the matter was being dealt with by the finance ministry and did not give further details.

The tax dispute is related to the imposition of a retrospective tax, related to Cairn Energy Plc’s listing of its Indian subsidiary on the Bombay Stock Exchange. An international arbitration tribunal, constituted under the agreement between UK and India for the promotion and protection of investments and the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL), in December 2020 ruled in favour of Cairn. The initial tax demand from the company was for 10,570 crore.

A government official familiar with the dispute said on condition of anonymity that the December 2020 award was flawed as the tribunal improperly exercised jurisdiction over a national tax dispute that the Republic of India never agreed to arbitrate.

The finance ministry said the CEO of the company and representatives of Cairn Energy Plc have approached the government for discussions to resolve the matter.

“Constructive discussions have been held and the Government remains open for an amicable solution to the dispute within the country’s legal framework,” it said.

The action in France is the latest step in Cairn’s enforcement strategy of pursuing the Indian Government across multiple jurisdictions for the international arbitration award of $1.7 billion [including interests], the company’s spokesperson explained.

To date, London-listed Cairn is pursuing the Government of India in multiple jurisdictions, primarily focused on regions with high value assets. “Last month Cairn filed a petition with the courts in the Southern District of New York, seeking judicial confirmation that Air India, the national carrier, can be classed as the alter ego of the Indian state and thereby jointly liable for the arbitral award,” he said.

The arbitration award has also been registered in jurisdictions, including the US, UK, Canada, Singapore, Mauritius, France and the Netherlands, the spokesperson added.

“Our strong preference remains an agreed, amicable settlement with the Government of India to draw this matter to a close, and to that end we have submitted a detailed series of proposals to them since February this year. However, in the absence of such a settlement, Cairn must take all necessary legal actions to protect the interests of its international shareholders.”

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