UPDATED: July 8, 2021, 04:03 PM IST
Britain’s Cairn Energy Plc has effectively seized 20 Indian government properties in Paris after securing an order from a French court. The move is part of a USD 1.7 billion arbitration award, reported news agency PTI quoting sources familiar with the matter.
The report said that the French court had ordered Cairn Energy’s takeover of Indian government properties, mostly comprising flats, on June 11.
The legal process for the takeover was completed on Wednesday evening, added the report. The government, which challenged the arbitration verdict against it, is yet to comment on the matter.
This is the first asset freeze by Cairn Energy after an international arbitration panel ordered the Indian government to return USD 1.2 billion along with interest and penalty ($1.7 billion) to Cairn Energy after reversing a long-running retrospective tax demand case.
As the government did not honour the arbitration award, Cairn Energy moved courts in multiple jurisdictions overseas to recover the amount due by seizing government assets.
Cairn had said earlier that it had identified $70 billion of Indian government-owned assets around the globe, ranging from buildings and Air India aircraft that it would try to seize as the arbitration award was not honoured.
According to a Financial Times report, Cairn Energy said it would effectively transfer the ownership of the 20 properties, valued at 20 million Euros, including in the 16th and 14th arrondissements.
The publication has seen official documents confirming the French court’s authorisation to Cairn Energy.
The report also highlighted that Cairn Energy had even pushed the UK government to support its claim, but has been forced to adopt aggressive measures after India refused to honour the arbitration award.
RETROSPECTIVE TAX DEMAND CASE
Cairn Energy is not the only company that has secured a favourable order against India’s retrospective tax demand. Vodafone had also secured a similar order in its favour. However, the Indian government has challenged both the verdicts against it.
Under the retrospective tax law, passed in 2012, India demanded $1.4 billion in tax payments from Cairn Energy in connection with the UK group’s floatation of its Indian subsidiary on the Bombay Stock Exchange in 2007.
However, a Dutch arbitration tribunal ruled that India had violated its obligations under the UK-India Bilateral Investment Treaty in 2014 when tax officials seized Cairn Energy’s residual 10 per cent stake in the subsidiary, which it had sold to Vedanta.