Logistics

Air India sale hits turbulence with Cairn Energy lawsuit

P Manoj Mumbai | Updated on May 15, 2021

Tata Group and SpiceJet's chairman and managing director Ajay Singh have been shortlisted to bid for the carrier, according to reports

Air India privatisation has suffered a potential setback after Cairn Energy Plc, the British oil and gas firm, sued the national carrier in a US court seeking to enforce the $1.2 billion arbitration award it won in December last year against the government in a retrospective tax dispute.

“If the US court orders attachment of Air India’s properties including its aircraft, then the privatisation process could be in trouble,” said an executive whose company was involved in a similar arbitration case relating to breach of bilateral investment treaty.

He explained that the party winning the arbitration award has to go for execution of the award. At the time of filing an execution application in court, it can also file an application for attachment of properties of sub-sovereign entities, he said. This will give it possession of the properties as security till the amount is paid.

“If the government doesn’t pay the arbitration award amount, it can sell the properties and recover the money,” he said.

Tata Group and SpiceJet's chairman and managing director Ajay Singh, in his individual capacity, have been shortlisted to bid for the carrier, according to media reports.

The government has initiated the process of selling 100% of its stake in Air India to a private buyer.

Cairn said in a presentation in March that the award is enforceable in over 160 jurisdictions under the 1958 New York Convention.

“Registration of the award and preparatory identification of assets has begun in multiple countries,” the firm said in a March 9 presentation on its website.

Published on May 15, 2021

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