French court allows Cairn Energy to seize 20 Indian properties
A French court order has reportedly allowed Britain's Cairn Energy to seize some 20 properties owned by the Indian government in Paris. The properties will be seized as part of the recovery of a $1.7 billion arbitration award, sources told the news agency PTI. Cairn Energy said it prefers an "amicable" settlement, adding that it will take all legal actions if necessary.
Cairn allowed to seize India's properties in Paris
The Tribunal judiciaire de Paris had on June 11 agreed to Cairn's application to freeze (through judicial mortgages) residential real estate located in central Paris owned by the Indian government, three sources told PTI. Legal formalities for the same were completed by Wednesday evening, they said. The properties—valued at over €20 million—mostly comprise flats used by the Indian government establishment in France.
Cairn identifies India's assets worth $70 billion
India will now not be able to sell the concerned properties in Paris. "This is the necessary preparatory step to taking ownership of the properties and ensures that the proceeds of any sales would be due to Cairn," one of the sources told PTI. Cairn has notably identified $70 billion worth of Indian assets to recover $1.72 billion (including interest and penalty).
Why does India owe money to Cairn Energy?
Cairn had invested in India's oil and gas sector in 1994 and had made a huge oil discovery in Rajasthan a decade later. Thereafter, its Indian assets were listed on the BSE in 2006. Five years later, India passed a retroactive tax law, asking Cairn to pay Rs. 10,247 crore plus interest and penalty for the reorganization linked to the flotation.
International tribunal overturned taxes imposed on Cairn
However, in December last year, a three-member international arbitration tribunal unanimously overturned the taxes imposed on Cairn retrospectively and ordered India to refund the shares sold, dividend confiscated, and tax refunds withheld. The tribunal incidentally comprised one judge appointed by India.
What is India's stand in the matter?
India has not accepted the arbitration award, moving a ''setting aside'' petition in a Netherlands court. In May, India had said the tribunal "improperly exercised jurisdiction over a national tax dispute that the Republic of India never offered and/or agreed to arbitrate." It said Cairn's 2006 reorganization was an "abusive tax-avoidance scheme," depriving its investments of any protection under the India-UK bilateral investment treaty.
Cairn moves other lawsuits to recover award
Cairn has filed multiple overseas lawsuits to enforce the arbitration award on India. Last month, it moved a suit in the US District Court for the Southern District of New York suggesting that Air India is the Indian government's "alter-ego," and hence, can be held liable for the recovery of assets. Similar lawsuits may be filed in other countries where India has high-value assets.
Our strong preference remains an agreed, amicable settlement: Cairn
Cairn's spokesperson said, "Our strong preference remains an agreed, amicable settlement with the Government of India to draw this matter to a close, and to that end, we have submitted a detailed series of proposals to them since February this year." "However, in the absence of such a settlement, Cairn must take all necessary legal actions to protect the interests of its international shareholders."