The UK-based Cairn Energy has decided to file lawsuits in the US and other countries to seize overseas assets of the Indian government companies as part of the $1.2 billion award by the international arbitration tribunal. These are primarily non-diplomatic assets, owned by the Indian government.
Dennis Hranitzky, head of the sovereign litigation practice at Quinn Emanuel Urquhart & Sullivan, a law firm representing the company, told news agency PTI that Cairn is looking to pressurise the government by seizing its overseas assets.
The company is aiming Indian government assets in the US, UK, Canada, France, Singapore, the Netherlands and three other countries. Notably, the international arbitration tribunal in the Netherlands in December 2020 had overturned India's demand for Rs 10,247 crore in taxes, while ordering the government to return $1.2 billion in value of shares it had sold, dividends seized and tax refunds withheld to recover the tax demand.
"Cairn plans to bring lawsuits in the coming weeks to pierce the corporate veil to establish that (certain) state-owned entities are India's alter ego under Bancec for enforcing the arbitration award," Hranitzky said.
The Bancec guidelines deal with determining when a judgment against a foreign state is enforceable against its agencies. The development comes a week after India reportedly challenged the arbitration tribunal verdict in a court in The Hague last week.
In a major setback to India, the country lost the arbitration case related to a tax dispute to the UK oil major Cairn Energy Plc in December 2020.
The international arbitration tribunal concluded that the Cairn tax issue does not amount to a "tax dispute" but a "tax-related investment" dispute, which is why it falls under its jurisdiction. It said India's tax demand from Cairn is not valid and amounts to a breach of fair treatment under the bilateral investment protection pact.
With PTI inputs