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Cairn tax case: US, UK, 3 other courts confirm $1.4-b arbitration award against India

Press Trust of India New Delhi | Updated on March 08, 2021

Courts in five countries, including the US and the UK, have given recognition to an arbitration award that asked India to return $1.4 billion to Cairn Energy plc — a step that now opens the possibility of the British firm seizing Indian assets in those countries, if New Delhi does not pay, sources said.

Cairn Energy had moved courts in nine countries to enforce its $1.4- billion arbitral award against India, which the company won after a dispute with the country's revenue authority over a retroactively applied capital gains tax.

Of these, the December 21 award, from a three-member tribunal at the Permanent Court of Arbitration in the Netherlands, has been recognised and confirmed by courts in the US, the UK, Netherlands, Canada and France, three people with knowledge of the matter said.

Registering the award

Cairn has started the process to register the award in Singapore, Japan, the UAEand Cayman Islands, they said. The registration of the award is the first step towards its enforcement in the event of the government not paying the firm.

Once the court recognises an arbitration award, the company can then petition it for seizing any Indian government assets such as bank accounts, payments to state-owned entities, airplanes and ships in those jurisdictions, to recover the monies due to it, they said.

So far, the government has not directly commented on honouring or challenging the Cairn arbitration award, but Finance Minister Nirmala Sitharaman had last week indicated of going in for an appeal.

Cairn’s shareholders, who include top financial institutions of the world, want the company to go for enforcement action if New Delhi fails to pay it.

Published on March 08, 2021

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