Cairn Energy Plc will push authorities to impound Indian belongings if the South Asian nation declines to honor an arbitration ruling in a $1.2 billion tax dispute, in response to a letter the corporate despatched to the Indian Excessive Fee within the UK A world tribunal final month stated India’s tax declare was not legitimate and requested Prime Minister Narendra Modi’s administration to return the cash to Cairn.
Whereas US crude explorer ConocoPhillips has been in search of to recoup $10 billion from Venezuela for years, it’s the primary time in current reminiscence an organization has threatened to grab India’s abroad belongings. The warning follows a sequence of occasions that may be traced again to a 2012 legislation change permitting the nation’s authorities to retrospectively tax capital positive aspects.
The ruling is remaining and binding, and failure to conform would breach the UK-India bilateral funding safety treaty and different worldwide guidelines, Cairn Power’s Chief Government Officer, Simon Thomson wrote within the letter addressed to the Indian Excessive Commissioner Gaitri Issar Kumar in London, and reviewed by Bloomberg Information.
“As India is a signatory to the New York Conference, the award will be enforced in opposition to Indian belongings in quite a few jurisdictions all over the world for which the required preparations have been put in place,” in response to the letter, referring to the 1959 Conference on the Recognition and Enforcement of Overseas Arbitral Awards.
India’s international ministry didn’t instantly reply to an e-mail in search of touch upon the letter and its contents. Cairn declined to remark.
Earlier this month, Malaysia’s authorities had impounded a aircraft owned by state service Pakistan Worldwide Airways on a court docket order resulting from a UK court docket dispute with plane lessors. ConocoPhillips moved to grab shares of a unit of Venezuela’s state-owned oil firm after the South American producer did not make funds on a multibillion-dollar settlement settlement.
Whereas Cairn didn’t point out any Indian asset in its letter, The Hindu newspaper earlier reported, citing folks it didn’t establish, that belongings might embody financial institution accounts of its diplomatic missions, non-diplomatic premises, planes of state service Air India and state-owned ships within the UK, Netherlands, France, Canada and the US
Cairn Energy has requested the Indian authorities for an early indication of implementing the arbitration award, effectively earlier than the announcement of its full 12 months earnings on March 9 for readability of its shareholders, in response to the letter.
The UK oil explorer acquired the tax declare from Indian authorities in March 2015 over a restructuring carried out in 2006 whereas getting ready for an preliminary public providing of Cairn India. The tax authorities seized 10 per cent of Cairn India’s shares, then valued at about $1 billion, in response to data on Cairn Power’s web site.
The Edinburgh-based firm filed a dispute beneath the UK-India Funding Treaty and sought worldwide arbitration that began later in 2015 for the losses over expropriation of its investments in India from the minority holding.