Cairn Energy seizes Indian govt properties in France as $1.7 billion tax dispute escalates

By: |
Updated: July 08, 2021 11:55 AM

The oil producer and the Indian government have been at loggerheads for months after an arbitration tribunal ruled in favour of Cairn and asked the Indian government to pay $1.7 billion over a tax dispute.

Cairn case: PSBs not asked to withdraw funds from foreign currency accounts, says govtIndia had seized and sold shares of Cairn in its erstwhile India unit, confiscated dividend due and withheld tax refunds to recover the tax demand it had levied two years after passing a law in 2012 that gave it powers to levy tax retrospectively. (File image)

Scottish energy giant Cairn Energy has seized properties owned by the Indian government in Paris, the Financial Times reported on Thursday. The oil producer and the Indian government have been at loggerheads for months after an arbitration tribunal ruled in favour of Cairn and asked the Indian government to pay $1.7 billion over a tax dispute. A three-member international arbitration tribunal, last year, had unanimously overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividends confiscated and tax refunds withheld to recover such demand.

FT reported that Cairn Energy would transfer ownership of 20 properties valued at over €20 million. A French court had authorised the freeze, according to the report. However, official sources have denied the claim. “There have been news reports that Cairn Energy has seized State-owned property of Government of India in Paris. However, the government of India has not received any notice, order or communication, in this regard, from any French Court,” they said. Officials said that the Indian government is trying to ascertain the facts of the matter, and plans to take appropriate legal remedies whenever such an order is received.

Cairn Energy had earlier said it has identified $70 billion of Indian assets overseas for potential seizure to collect the arbitration award, including interests and penalty. Reports suggest that assets identified by Cairn Energy range from Air India’s planes to vessels belonging to the Shipping Corporation of India. 

In May, Cairn Energy had filed a lawsuit in the US pleading that Air India is controlled by the Indian government so much that they are ‘alter egos’ and the airline should be held liable for the arbitration award. The national carrier has till mid-July challenge the lawsuit filed by Cairn Energy.

Months after the arbitration ruling, the Indian Government has still not accepted the award. The government has already filed an application to set aside the December 2020 international arbitral award in The Hague Court of Appeal.

The tribunal had ordered the Indian government to return the value of shares that were sold, dividends seized and tax refunds withheld to recover the tax demand. The order also asked the Indian government to compensate Cairn Energy “for the total harm suffered” together with interest and cost of arbitration. Earlier in September last year, UK’s Vodafone Group had also won an international arbitration against the demand of Rs 22,100 crore in taxes.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Trillion dollar question: So, how much did Tim Cook make as Apple CEO in 2020?
2Flipkart adds 4 supply chain facilities in Gujarat, helps create over 5,000 local job opportunities
3Apple Magic Keyboard with Touch ID no longer exclusive to M1 iMac: India price, top features, other details