Cairn eyes $70-bn Indian assets
New Delhi UK's Cairn Energy has identified $70 billion of Indian assets overseas for potential seizure to collect $1.72 billion due from the government -- a move if successful will put India in league with Pakistan and Venezuela which faced similar enforcement action over failure to pay arbitration awards. The assets identified range from Air India's planes to vessels belonging to the Shipping Corporation of India, and properties owned by State-owned banks to oil and gas cargoes of PSUs, three people familiar with the matter said. These assets are across several jurisdictions, they said without giving further details.
Cairn plans to move courts in the US to Singapore for seizure of the assets in absence of Indian government's refusal to honour an international arbitration award. "The Indian government naturally will challenge such seizure but to save the assets it may have to pawn money equivalent to the value of assets in some financial security such as bank guarantee. The court will return such a guarantee to India if it does not find merit in Cairn's case. But the surety will be passed on to Cairn if the court finds that India had failed to honour its obligation," a source said.
Cairn has got an international arbitration award -- which overturned levy of retrospective taxes and ordered New Delhi to return the value of shares it had sold, dividends seized and tax refunds withheld to recover such taxes -- registered in the US, UK, France, the Netherlands, Singapore, Mauritius, Canada's Quebec province, Japan and UAE. Now it has started moving courts to get a declaration that State-owned entities are alter egos of India and they should be held liable for discharge of the arbitration award in absence of the government making payments. Cairn on May 14 filed a lawsuit in a New York court to get Air India recognised as the alter ego of India and that "it should be held jointly and severally responsible for India's debts, including from any judgment resulting from recognition of the award".
While the finance ministry has so far not commented on the Cairn move, sources said India will take all necessary steps to defend against any such "illegal enforcement action". India, they said, will contest the move on grounds that the government has challenged the arbitration award in the appropriate court in The Hague and it is confident that the award will be set aside.
