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Cairn sets eyes on piercing Air India; begins process to seize Indian overseas assets to recover tax award

UK’s Cairn Energy Plc has brought a lawsuit in the US court that potentially can lead to seizing of Air India’s overseas assets such as airplanes to recover USD 1.72 billion from the Indian government which an international arbitration tribunal had awarded after overturning levy of retrospective taxes.

Cairn on May 14 filed a lawsuit in the US District Court for the Southern District of New York seeking declaration of Air India as the ‘alter ego of Indian government’ by virtue of control and as a state-owned company it “legally indistinct from the state itself”, three sources with direct knowledge of the development said.

PTI had on March 28, 2021 reported that Cairn will bring lawsuits to pierce the corporate veil to establish that certain state-owned entities are India’s alter ego under Bancec for enforcing the arbitration award.

The Bancec guidelines deal with determining when a judgment against a foreign state is enforceable against its agencies. Sources said the May 14 lawsuit seeks to make Air India liable for discharge of the arbitration award against the Indian government.

While Cairn said it is “taking necessary legal steps to protect shareholders’ interest in the absence of a resolution to the arbitral award”, sources in the government said India will take all necessary steps to defend against any such “illegal enforcement action”.

India, they said, will contest the move on grounds that the government has challenged the arbitration award in the appropriate court in The Hague and it is confident that the award will be set aside.

Sources said the government has also engaged a counsel team which is ready to defend against any enforcement action.

Source
financial express
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