After reports that Cairn Energy has seized Indian government owned property in Paris appeared in the media, the central government has said that though it has not received any notice, order or communication in this regard from any French Court, it will explore further legal and amicable solutions to resolve dispute.
Responding to the news reports, Ministry of Finance on Thursday said that the “…government is trying to ascertain the facts, and whenever such an order is received, appropriate legal remedies will be taken, in consultation with its Counsels, to protect the interests of India”.
The press release from the Ministry also said that the government has already filed an application on March 22, 2021 to set aside the December 2020 international arbitral award in The Hague Court of Appeal which ruled in favor of Cairn.
“Government of India will vigorously defend its case in Set Aside proceedings at The Hague”, said the government communique.
It is also stated that the CEO and the representatives of Cairns have approached the Government of India for discussions to resolve the matter. “Constructive discussions have been held and the Government remains open for an amicable solution to the dispute within the country’s legal framework”, said the Ministry.
The reports of seizing of India assets came following India’s refusal to abide by the arbitration order in December 2020 that asked the Indian government to pay Cairn NSE 0.81 % $1.2 bn in damages, plus interest and costs.
Earlier today, the Financial Times (FT) reported that the French court permitted Cairn Energy to freeze several India-owned assets in Paris towards the settlement of the international arbitration order. The order allows Cairn to take over 20 properties of the government of India.
Cairn will effectively transfer the ownership of the 20 properties valued at more than 20 million euros, including those in the 16th arrondissement in Paris, the FT report said.
The Dispute in short
The dispute with Cairn began in 2014 when India demanded capital gains tax of Rs 10,200 crore plus interest and penalty for an asset restructuring that the company did at its India arm in 2006, ahead of the listing of its shares in 2007.
An official Indian assessment done in 2014 reached the conclusion that Cairn had made capital gains on reorganising its India business prior to its IPO. Cairn, on the other hand, maintained all along that its restructuring was wholly in compliance with the laws in force during that time.
Soon, Cairn Energy moved courts in the US, UK, Netherlands, Canada, France, Singapore, Japan, UAE and Cayman Islands against India and sought damages for ‘wrongfully applying’ a retrospective tax demand.
In December 2020, a Permanent Court of Arbitration at The Hague, Netherlands had ruled that the Indian government should pay damages worth $1.2 billion to Cairn Energy. As per the arbitration panel ruling, the award can be enforced against India’s overseas properties located in over 160 nations that are signatories to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Earlier this year, Cairn CEO Simon Thomson had met top finance ministry officials for three straight days over the issue. FM Nirmala Sitharaman had on March 5 hinted that India would appeal against the award — saying it was her “duty” to appeal in cases where the nation’s sovereign authority to tax is questioned.
Aayush Pal 
Sindhuri Sai