June 16, 2021

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Cairn Power Sues Air India to Implement $1.2 Billion Arbitration Award

Cairn Power has sued India’s flagship provider Air India to implement a $1.2 billion arbitration award that it received in a tax dispute towards India, in keeping with a U.S. District Courtroom submitting reviewed by Reuters.

The transfer ratchets up strain on India’s authorities to pay the sum of $1.2 billion plus curiosity and prices that the British agency Cairn was awarded by an arbitration tribunal in December. The physique dominated India breached an funding treaty with Britain and mentioned New Delhi was liable to pay.

Cairn filed the lawsuit on Friday within the U.S. District Courtroom for the Southern District of New York, searching for to make Air India answerable for the judgement that was awarded to Cairn. The lawsuit argued that the provider as a state-owned firm, is “legally vague from the state itself.”

“The nominal distinction between India and Air India is illusory and serves solely to help India in improperly shielding its property from collectors like (Cairn),” the submitting mentioned.

Air India didn’t instantly reply to requests searching for remark.

Nonetheless, a senior authorities official, who requested to not be named, mentioned the federal government and Air India had not acquired any formal discover of such a swimsuit.

“As and when any such discover is acquired. The federal government or involved group shall take all mandatory steps to defend towards any such unlawful enforcement motion,” the official mentioned, including New Delhi has engaged a staff able to defend towards any enforcement motion initiated by Cairn wherever on this planet.

Cairn’s transfer might doubtlessly jeopardize India’s makes an attempt to divest the state-owned provider this yr. New Delhi mentioned in December that it had acquired a number of expressions of curiosity after it moved to privatise the loss-making entity.

The senior authorities official famous New Delhi has filed an attraction towards the arbitration award, and added “the federal government is assured that the award might be put aside.”

Cairn had since January, nonetheless, begun taking steps to establish Indian property abroad towards which it might implement the award together with financial institution accounts, plane and even ships. It had additionally began registering its declare towards India in courts in the US, Britain, Netherlands and Canada.

Reuters final week reported that India had requested state-run banks to withdraw funds from their overseas forex accounts overseas, fearing Cairn may sue to grab the funds.


Cairn had mentioned beforehand it’s nonetheless pursuing a settlement with New Delhi, however within the interim it has additionally been laying the grounds to grab Indian property ought to talks fail.

“Cairn continues to have constructive engagement with the federal government of India,” a spokesman for the corporate instructed Reuters final week.

The corporate was not instantly reachable for touch upon Saturday.

Nonetheless, an Indian official instructed Reuters final week, talks between New Delhi and Cairn have been making “little progress” and famous that India’s directive to state-run banks to withdraw overseas forex funds sitting abroad confirmed the federal government is nervous that Cairn might transfer shortly to grab property.

It’s unclear whether or not the swimsuit towards Air India might function a method for Cairn to grab Air India plane that land on U.S. soil.

Earlier this yr, a Malaysian court docket allowed the seizure of a Pakistan Worldwide Airways Boeing 777 plane that landed in Kuala Lumpur, after Dublin-based AerCap had filed swimsuit in a British court docket over unpaid dues. The jet was launched practically two weeks later after the 2 sides reached an amicable settlement.

Air India is the one Indian provider that flies long-haul flights to locations corresponding to the US and Canada. The frequency of its abroad flights has lately been impacted because the second wave of the pandemic that has hit India, has prompted nations to limit, or ban journey from the South Asian nation.

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