Cairn Energy sues Air India over $1.2bn arbitration award
Cairn Energy has sued India’s flagship carrier Air India to enforce a $1.2bn (£850m) arbitration award that it won in a tax dispute against India, according to a US court filing.
The move ratchets up pressure on India’s government to pay the sum of $1.2bn plus interest and costs that the FTSE 250 listed firm was awarded by an arbitration tribunal in December.
The body ruled India breached an investment treaty with Britain and said New Delhi was liable to pay the independent oil and gas firm.
Cairn filed the lawsuit yesterday in the US District Court for the Southern District of New York, Reuters reported, in a bid to make Air India liable for the judgment that was awarded to Cairn.
It argued that the carrier as a state-owned company, is “legally indistinct from the state itself.”
“The nominal distinction between India and Air India is illusory and serves only to aid India in improperly shielding its assets from creditors like (Cairn),” the filing said.
Air India did not immediately respond to requests seeking comment.
Cairn’s move could potentially jeopardize India’s attempts to divest the state-owned carrier this year. New Delhi said in December that it had received multiple expressions of interest after it moved to privatize the loss-making entity.
The senior government official noted New Delhi has filed an appeal against the arbitration award, and added “the government is confident that the award will be set aside.”
Cairn had since January, however, begun taking steps to identify Indian assets overseas against which it could enforce the award including bank accounts, aircraft and even ships.
It had also started registering its claim against India in courts in the United States, Great Britain, Netherlands and Canada.
Reuters last week reported that India had asked state-run banks to withdraw funds from their foreign currency accounts abroad, fearing Cairn might sue to seize the funds.
Cairn had said previously it was pursuing a settlement with India, but in the interim it has also been laying the grounds to seize Indian assets should talks fail.