A lawsuit filed in New York by Cairn Energy Plc seeking to declare national carrier Air India as an alter ego of the government to pressurise India to pay the $1.2 billion arbitration award the British oil and gas firm won in a retrospective tax dispute, could stumble if the court takes a recent similar case as a precedent.
The precedent relates to a case brought by Lithuanian creditors against Tajik Air, the national airline of Tajikistan, to enforce a $20 million award.
“We were able to get the lawsuit dismissed because the US courts found that Tajik Air was not an alter ego of the Tajik Republic,” Sudhanshu Roy, International Associate at Washington-based law firm Foley Hoag LLP, which represented Tajik Air in the case, told BusinessLine .
The key issue, according to Roy, in the enforcement case brought by Cairn Energy against Air India would be whether Air India is an alter ego of the Government of India.
“Normally, international arbitral awards against States cannot be enforced against state-owned entities because the presumption is that state-owned entities operate independently and are separate from a sovereign. This presumption can, however, be rebutted if it can be shown the Government exercises control over the commercial and day-to-day affairs of the company. It remains to be seen if these requirements are met in the case of Air India,” Roy added.