We have launched our mobile app, get it now. Call : 9354229384, 9354252518, 9999830584.  

Current Affairs

Cairn energy goes after Indian assets

Date: 12 July 2021 Tags: India & World

Issue

Cairn Energy has obtained order from a French court to seize 20 properties of Indian government in Paris to enforce arbitration award.

 

Background

Indian government had recently lost an arbitration tribunal judgment and was asked to pay $ 1.2 billion to British energy company Cairn Energy plc.

 

Details

  • The order was the first one obtained against Indian government to get back the due amount which Cairn had been made to pay in a retrospective tax dispute.

  • The Indian government has said it has not received any notice regarding seizing of its property from the French court.

 

The dispute

  • The dispute was between Indian government and Cairn Energy regarding a retrospective Tax law made by India in 2012.

  • The law was aimed at a deal that took place in 2006, when shares in a non-Indian company were transferred to an Indian company.

  • Cairn Energy of UK had transferred shares from Cairn India Holdings to Cairn India Limited. This deal was taxed under a new retrospective tax law.

  • The company argued that the retrospective law was violation of India-UK bilateral investment treaty, which had mandated India to consider investment in a fair and equitable manner.

 

India’s move

  • India is yet to accept the order and thinking of challenging the move in other arbitration tribunal. Cairn Energy has already started the process of extracting the dues.

  • India has moved an appeal petition in Netherlands. The proceedings are yet to start but the company has already started identifying Indian assets.

 

Indian assets

  • Cairn Energy has identified more than $ 70 billion Indian assets in multiple countries including US, UK, France, Canada, Mauritius, Singapore etc.

  • Unless India proves that charges are wrong, arbitration decisions can be enforced by foreign courts. An out of court settlement can be done by India.