• Monday, June 27, 2022

Business

India confirms French court order to freeze assets in Paris

File photo of Cairn India’s oil and gas exploration plant in Barmer, Rajasthan. (Money Sharma/AFP via Getty Images)

By: Shilpa Sharma

THE Indian government has confirmed a French court order for freezing certain state-owned assets in Paris following a petition filed by Britain’s Cairn Energy to recover an arbitration award of $1.72 billion (£1.2 bn) from New Delhi.

The sum was awarded to Cairn Energy last year by an international tribunal over a tax dispute with India.

“Yes sir, an order has been passed by a French Court freezing certain Indian government properties in the case pertaining to Cairn Energy,” minister of State for Finance Pankaj Chaudhary said in a written reply in the upper house of parliament today (27).

He also stated that the government has filed an appeal against an international arbitration tribunal overturning the levy in back taxes on Cairn  Energy.

The said Indian government’s assets in Paris comprise 20-odd centrally located properties mostly flats, valued at more than €20 million (£17m).

In June, the French court, Tribunal Judiciaire de Paris, agreed to Cairn’s application to freeze properties owned by the Indian government in central Paris. The legal formalities for the same were completed earlier this month.

In December last year, a three-member international arbitration tribunal overturned levy of retrospective taxes on Cairn and ordered India to refund shares sold, dividend confiscated and tax refunds withheld to recover such taxes.

The government did not accept the order and filed an application to set aside the December 2020 international arbitral award on March 22, 2021, in The Hague Court of Appeal, the minister informed the house.

Besides, an international law firm, with relevant experience, has been engaged for handling enforcement proceedings, Chaudhary said.

“In consultation with its counsel team, the government is taking all appropriate legal steps to protect its interest,” he said.

Meanwhile, Cairn has got the arbitration award registered in countries such as the US, the UK, Canada, Singapore, Mauritius, France and the Netherlands.

The British company has also identified $70bn (£50.8bn) of Indian assets overseas including buildings and Air India aircraft for the potential seizure to collect the award, which totals $1.72bn (£1.2 bn) after adding interest and penalty.

Last month, Cairn brought a lawsuit in the US District Court pleading that Air India should be held liable for the arbitration award, as the airline is controlled by the Indian government so much that they are ‘alter egos’.

The energy company had invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006 it listed its Indian assets on the BSE.

Five years after the listing, the government passed retroactive tax law and billed Cairn Rs 102.47bn (£997m) plus interest and penalty for the reorganisation tied to the flotation.

The government then confiscated and liquidated Cairn’s remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand.

Cairn challenged the move before an arbitration tribunal in The Hague, which in December ruled in the company’s favour.

Eastern Eye

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