New Delhi, March 8
Courts in five countries, including the US and the UK have given recognition to an arbitration award that asked India to return $1.4 billion to Cairn Energy plc – a step that now opens the possibility of the British firm seizing Indian assets in those countries if New Delhi does not pay, sources said.
Cairn Energy had moved courts in nine countries to enforce its $1.4-billion arbitral award against India, which the company won after a dispute with the country’s revenue authority over a retroactively applied capital gains tax.
5 nations confirm $1.4-billion award
- Courts in five countries, including the US and the UK, have given recognition to an arbitration award that asked India to return $1.4 billion to Cairn Energy plc
- Cairn Energy had moved courts in nine countries to enforce its $1.4-billion arbitral award against India
Of these, the December 21 award from a three-member tribunal at the Permanent Court of Arbitration in the Netherlands has been recognised and confirmed by courts in the US, the UK, Netherlands, Canada and France, three people with knowledge of the matter said.
Cairn has started the process to register the award in Singapore, Japan, the UAE and Cayman Islands, they said.
The registration of the award is the first step towards its enforcement in the event of the government not paying the firm.
Once the court recognises the arbitration award, the company can then petition it for seizing any Indian government assets such as bank accounts, payments to state-owned entities, airplanes and ships in those jurisdictions, to recover the monies due to it, they said.
So far, the government has not directly commented on honouring or challenging the Cairn arbitration award, but FM Nirmala Sitharaman had last week indicated of going in for an appeal.
Cairn’s shareholders, who include top financial institutions of the world, want the company to go for enforcement action should New Delhi fail to pay it.
Cairn had on Sunday said it will “begin meetings this week with shareholders in the UK and US, with the international arbitration award high on the agenda.” “The company met the Government of India last month and is taking all necessary steps to protect their shareholders’ interests,” it had said.
The tribunal had on December 21 ruled that the government breached an investment treaty with the UK and was therefore liable to return the value of shares it had seized and sold, dividend confiscated and tax refund stopped to adjust a Rs 10,247-crore tax demand. — PTI