British oil and gas exploration company Cairn Energy has filed a case in a United States district court to enforce a $1.2 billion (over Rs 8,754 crore) arbitration award it won in a tax dispute case against the Indian government in December last year, Reuters reported on Tuesday.
Cairn aims to enforce the award under international arbitration rules, commonly called the New York Convention, and recover losses caused by India’s “unfair and inequitable treatment of their investments”, a court filing accessed by Reuters stated.
Cairn has asked the court to recognise and confirm the award in a bid to build pressure on the Indian government to pay the dues, according to Reuters. “If Cairn wins the case, it will be a step towards attaching and seizing Indian assets overseas, especially in the US,” an unidentified source told the news agency. The gas company was reportedly identifying India’s overseas assets, including bank accounts and even Air India planes or Indian ships, that could be seized in the absence of a settlement.
In December, the international arbitration tribunal in The Hague had ruled that India’s demand of Rs 10,247 crore from Cairn in past taxes was not valid. The retrospective tax demand was on alleged short-term capital gains that the company had made when it transferred ownership from Cairn UK Holdings to Cairn India in 2006.
The tribunal had ruled that India’s demand was in breach of an bilateral investment protection pact with the United Kingdom, and told New Delhi to pay $1.2 billion crore as damages to the oil company. In response to the arbitration, India’s finance ministry had said that the government will consider all options, including legal remedies before taking further action on the matter.
On February 9, Cairn Energy had tweeted a video of its Chief Executive Officer Simon Thomson, saying that he was looking forward to meet Finance Minister Nirmala Sitharaman next week.
“We would request, along with others, that the Indian government move swiftly to adhere to the award that has been given,” Thomson said in the video. “It is important for our shareholders who are global financial institutions and who want to see a positive investment climate in India. I am sure that in working together with the government, we can swiftly draw this to conclusion and reassure those investors.”
The Union finance ministry and the external affairs ministry, however, did not comment on the matter, according to Reuters.