Just like US oil firm ConocoPhillips grabbed Venezuelan assets overseas to enforce an arbitration award, Indian bank accounts, airplanes and other foreign properties can be seized to collect $1.4 billion awarded to UK’s Cairn Energy against Indian retro tax, according to a letter seen by PTI.
The British firm has begun identifying overseas Indian assets in case the Indian government fails to honour the arbitration award.
Cairn CEO Simon Thomson in the January 22 letter to Indian High Commissioner in London, with copies marked to Prime Minister’s Office, Finance Minister Nirmala Sitharaman and External Affairs Minister S Jaishankar, the arbitration award is “final and binding” and “the Government of India has an obligation to comply with its terms.”
“As India is a signatory to the New York Convention, the award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place,” he wrote.
In 2019, ConocoPhillips had moved US courts to seize Venezuelan state oil company PDVSA’s assets to collect $2-billion compensation it had won in an arbitration against Venezuela’s 2007 takeover of its assets. PDVSA thereafter paid ConocoPhillips.
The three-member tribunal, which comprised a judge appointed by India, last month unanimously overturned a ₹10,247-crore retrospective tax demand on Cairn and asked the Indian government to return value of the shares it sold, dividend it seized and tax refunds it stopped to enforce the tax.
If India does not comply with the order of the tribunal at the Permanent Court of Arbitration in The Hague, it would be a violation of international rules on arbitral awards, commonly called the New York Convention.
Sources with knowledge of the matter said the options before the Indian government were limited. An appeal against the award in a court in The Hague may not yield positive results as the tribunal had given a very detailed 582-page order to make it “as bullet-proof” as possible.