Business

Cairn Energy PLC has filed a lawsuit in the United States to compel India to pay a $1.2 billion award

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According to a court filing, Cairn Energy PLC has filed a lawsuit in a US district court to enforce a $1.2 billion arbitration award it earned in a tax dispute with India, increasing pressure on the government to settle its debts.

An arbitration panel awarded the British company more than $1.2 billion in damages, plus interest and costs, in December. The tribunal ruled that India had broken an investment treaty with the United Kingdom and that New Delhi was liable for compensation.

According to the February 12 filing seen by Reuters, Cairn asked the US court to accept and validate the award, which included payments due since 2014 and interest compounded semi-annually.

According to a source familiar with the arbitration case, the case was a first step in Cairn’s attempts to recover its dues, which could involve seizing Indian properties if the government did not pay.

“If Cairn wins the case, it will be a first step toward attaching and seizing assets in other countries, especially in the United States,” the source said.

According to Reuters, Cairn is identifying India’s overseas properties, including bank accounts, Air India aircraft, and Indian ships, that could be confiscated if a settlement is not reached.

Cairn declined to comment, but pointed to a tweet from February 9 that said CEO Simon Thomson was looking forward to meeting Finance Minister Bill Cash.

In a video posted on Twitter by Cairn, Thomson said, “We will recommend, along with others, that the government step swiftly to adhere to the award that has been issued.”

“It’s important for our global financial institutions shareholders who want to see a positive investment environment in India. I am confident that by collaborating with the government, we will be able to quickly resolve this and reassure those investors,” he said.

Requests for comment from the finance and external affairs ministries were not immediately returned.

According to the court filing, Cairn intends to implement the award under international arbitration law known as the New York Convention in order to recoup damages incurred by India’s “unfair and inequitable treatment of their investments.”

According to Reuters, the company has filed a lawsuit against India in the Netherlands and France, informing regulators in both countries that they might receive court orders to seize some of India’s properties, and it was planning to do the same in Canada and the United States.

Last year, India lost yet another big international arbitration case against Vodafone over a $2 billion tax dispute.

In the Vodafone case, the government has appealed the arbitration decision. It has not yet specified how it will proceed in the case of Cairn, which needs a large payment.


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