The ministry said that the government was strongly defending its case against the arbitral award in the The Hague Court of Appeal on several grounds, after it filed an application on March 22, 2021 to set aside the award issued in December 2020.
Cairn wants India to honour its word and pay $1.4 billion, shareholders to seek enforcement
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Last Updated: Mar 07, 2021, 11:02 AM IST
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Synopsis
Cairn has already moved courts in the US, UK, Netherlands, Canada, France, Singapore, Japan, UAE and Cayman Islands to get the December 21 international arbitration tribunal award registered and recognised.
Reuters
British oil firm Cairn Energy said its shareholders, including top financial institutions of the world, expect the use of the company s strong powers of enforcement to recover $1.4 billion from the Indian government should it not keep its word of honouring international arbitration tribunal awards on retrospective taxes.
Cairn has already moved courts in the US, UK, Netherlands, Canada, France, Singapore, Japan, UAE and Cayman Islands to get the December 21 international arbitration tribunal award registered and recognised - the first step before it can seek seizure of the Indian government assets such as ba
India will appeal against the arbitration award issued to Cairn Energy by the international tribunal on the grounds of contesting its sovereign right to tax, while strongly contesting other cases filed by Cairn in other international courts, sources said.
The appeal against the award is likely to be in the government in the Netherlands, while India will contest it s right to tax in the case filed by Cairn in a US court to implement the award. Cairn conducted transactions through tax havens to avoid taxes, government sources said. The UK based oil major reorganised it s assets in India back in 2007 before a public listing.
Synopsis
If India fails to comply, it will fall foul of the New York Convention. As India is a signatory to the New York Convention, the award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place, says Cairn CEO Thomson s letter to India.
Reuters
Related
India is staring at a potential $1.2-billion loss of face as the long-running retro tax case against Cairn Energy, the British oil firm, nears its climax.
At risk of seizure are Indian assets such as airplanes, bank accounts and other foreign properties that could be snatched to pay for the arbitration award.
Back when global investors still believed Prime Minister Narendra Modi would keep his promise to end the previous regime’s “tax terror,” his newly elected government made a costly error. In March 2015, someone in India’s labyrinthine bureaucracy decided to send a revenue demand to U.K.’s Cairn Energy Plc ruining Chief Executive Officer Simon Thomson’s birthday. This March 10, Thomson has every reason to celebrate both his birthday and victory in a tortuous legal saga that ended right before Christmas with a $1.2 billion international arbitration award in Cairn’s favor. But there’s still one big glitch: The check that should have been in the bank by now isn’t even in the mail. That raises the unpleasant prospect of a private company having to legally seize sovereign property globally, a course of action some of its shareholders are starting to recommend.