Cairn Energy has seized assets of India’s flagship carrier Air India after alleged reports of filing a lawsuit erupted out of the company ranks. Reportedly, the UK-based company has sued Air India following a $1.2 billion arbitration order that it had won in a tax dispute against India. The state of affairs got reviewed by Reuters under the jurisdiction of US District Court filings.
Ever since Cairn Energy got worthy of the arbitration reward, it was formulating ways to get it enforced. Thus, it commenced identifying Indian assets abroad. The argument that pops up among the inhabitants is how Cairn was entitled to such a humungous reward. What might have happened in the case rulings that prompted the sightings of the tax dispute in favor of the UK company?
It seems like Cairn Energy has conducted a well-versed study on India’s connections with its public frontiers, and shocked Air India without sniffing its actions. In December 2020, a Permanent Court of Arbitration at the Hague had designated a verdict to the Indian government to pay Cairn Energy compensation amount, since a case of retrospective tax has been allegedly put forward in deluded spirits and delineation.
The claim that cited the blame on the Indian government asserted that the contract got signed in a breach of aligning to the notion of fair and equitable treatment. Leading back to 1958, the Indian agreement had signed and ratified the New York Convention which allows the deposition of its assets across 160 countries, and that’s what got the situation comprehensively in favor of Cairn.
The company is attempting to pierce a corporate veil between the Indian government and its seized flag carrier Air India, proclaiming the decision of seizing assets for claiming USD 1. 7 billion. The firm has transpired the lawsuits in other countries including, UK, Canada, France, Singapore, before arriving at the actual trial to the US court. The corporate veiling of procuring the assets would cover crucial frontiers of the Indian industry. It will be including the likes of oil and gas, banking sectors, shipping conglomerates, and airlines. Three sources familiar with the potential scenario of the circumstances revealed the information.
Cairn has already taken a giant leap forward in identifying the opportunity of significant jurisdictions in Indian sovereign assets, according to the statement revealed by the company.
The power of gaining the advantage over the Indian assets expands to foreign lines and could deteriorate the paramount global recognition of the Indian contingent. Keeping in mind, it is a bewildering moment for once India’s largest flagship carrier. The body governing the case ratches up the pressure on the Indian government to pay liable damages against the breach of a treaty with Britain.
“The nominal assistance between India and Air Industry is illusory, and it aligns it interest to aid India in manipulatively sheilding its assets from business conglomerates like Cairn,” the filing said. Air India declined to request an imminent request to the journalists, and that’s left the company’s state worrying worldwide. The local reports had suggested that the Indian government hasn’t conceived their thoughts on the perturbation, but the feeling across the senior officials is that the nation will endeavor its utmost best to defend its foreign assets.
India deems to have challenged the last year’s arbitration reward in the Hague court, which protracted due to the lack of urgency of our domestic officials to pursue the proceedings. The court then described this negligence as “the alter ego of India” of exploiting Cairn’s interests on the international stage.
Cairn Energy’s Grim Warnings Perpetuates No Effects
Cairn said in the filing to the southern district of New York on Friday that the Indian government has refused to accede to paying such colossal damages and is bearing its nemesis. The statements could get validated on part of the government’s negligence time and again of not abiding by the rules of international trade. It was the second time that India marked down in international arbitration, the first occurred following the controversial legal tweak in 2012. It allowed India to retrospectively tax the companies and the ventures for their acquisition of Indian assets.
However, the escalating pressure puts turmoil on the government’s plan to part ways with their national flagship carrier. The process of privatizing Air India now edges closer towards emerging complications. Air India gets underpinned by the gigantic 600 billion rupees debt, is losing its footlong race legally and economically. The company’s representatives were also feeling the grimace of losing 200 million every day, and the legal tussle might be the final nail in the coffin to their miseries.
Contemplating the unprecedented times that the Indian economy gets crushed under, Cairn Energy might opt out for a diligent approach. The conception got laid down following the company’s delusional comments despite its urgency on the matter. In the absence of an ultimate conclusion on the arbitration reward, Cairn is attempting some revamping measures to protect the interests of the shareholders.
The company remains intrigued by the idea of having a constructive dialogue with the Government of India to find the final piece of the puzzle on the protracted matter. The long-running issue has unrivaled due to constant allegations and denials from both parties. In case, if India remains to affirm its stance of not plummeting the demands of Cairn energy, the firm might seek global assistance for impounding the Indian assets.
Is there a precedent to the long-stalling talks?
In the current scenario, India has only some limited options to turn the tide. The proclamation of not receiving the order won’t work now as the elongation will hamper India’s economic valuation. Earlier, a senior government official reported that talks between New Delhi and Cairn are pragmatic and making little progress. India’s directive to instruct the state-run banks to withdraw its foreign investment procurements shows that the government is threatful of Cairn’s rapidness to seize our domestic assets. India might undergo fully-fledged revocation of the allegations in eight jurisdiction courts including, the UK, US, and Canada.
As reported today’s morning, the government or the public service corporation(Air India) has denied receiving any such notice. Despite the denial, Air India is working on the ground level with the Financial Ministry to pan a way out of these disastrous circumstances. The person who had conveyed this matter behind closed doors also asserts that the government has established a specialized task force. The force gets initiated to defend any enforcement pushed down by Cairn Energy.
Air India has under the radar of vanquishing from the precinct of government’s handling for years but subsequently has been stuck under the roadblock, nowhere to go. The national carrier’s latest attempts to sell its assets have got rendered to failure due to the heavyweight emerging competition in the aviation industry.