A Scottish company’s battle to seize planes belonging to India’s national airline

A Scottish company with 180 employees seizing the planes of India’s national airline may seem an unlikely scenario.

But Cairn Energy is seeking authority to do so in the latest development in a legal saga testing British Prime Minister Boris Johnson’s willingness to defend British companies as he seeks to strike post-Brexit trade deals.

Cairn, which has annual revenues of less than $400 million but whose investors are the likes of BlackRock and Vanguard, is A lawsuit against Air India In New York to impose a judgment against New Delhi worth $1.2 billion plus interest – a total of $1.7 billion.

The oil and gas company is trying to prove that Air India is the “alter ego” of the Indian government and is thus “common . . . responsible for India’s own debts and obligations,” a move that could pave the way for US guards to seize the carrier’s planes. She even hired attorney Denis Hranitsky, who helped him in 2012 Argentinian navy ship in Ghana as part of a long battle between US hedge fund Elliott Capital Management and Buenos Aires.

It was the kern award by an international court In the Netherlands in December. If implemented, it could lead to good returns for Cairn shareholders and revitalize a business that has been crippled for years by a conflict that has forced it to divest assets, lay off employees and limit investments.

But five months later, the government of Indian Prime Minister Narendra Modi has shown no indication that it plans to pay.

The case is one of several between Western companies and New Delhi. Vodafone also became involved in a fight With the Indian tax authorities, which requested 3 billion euros in late payments.

It comes at a sensitive time in UK-India relations. countries last month Defining the 2030 Roadmap To strengthen ties in areas such as trade and defense. London hopes to start negotiations on a full trade agreement this fall.

The battle is rooted in a 2012 law that allowed New Delhi to retroactively tax cross-border transactions that were India’s primary assets.

In 2014, Cairn was prevented from selling its remaining 10 per cent stake in the former Cairn India subsidiary as authorities launched a tax investigation. The following year he was slapped with 1.6 billion dollar tax bill فاتورة.

Kern lifted proceedings under the UK-India BIT to force a withdrawal of the tax claim and to seek compensation for financial losses. Most of its remaining shares in Cairn India, which later merged with Vedanta, were sold by the Indian tax authorities.

Johnson did not mention the dispute during a call last month with Modi. The UK’s line is that it does not interfere in legal proceedings between the investor and the country to which it is not a party, although people familiar with the matter say previous administrations have raised the Kern case.

We cannot be in a situation where Boris Johnson fails to stand up for British corporate interests. . . “Just in the hope that it will pave the way to a future trade deal,” said Emily Thornberry, Labour’s shadow trade minister.

The Scottish government said it would ensure “the Scottish and other economic interests of the UK government are made clear before and during any future discussions with the Indian government on the FTA”.

Cairn, who has identified $70 billion in Indian assets globally that could be pursued, insists she remains “open to continuing a constructive dialogue with the Government of India”.

International arbitration experts point out that other Indian-owned assets such as stocks and bank accounts may be easier targets, and that the maneuver against Air India – which the Modi government is trying to privatize – has been designed to maximize effect.

“They are trying to reach a settlement,” said one international arbitration attorney, who called Kern’s behavior “aggressive.”

Satvik Varma, a New Delhi-based lawyer, said Kern has few options because Indian courts do not recognize international arbitration awards granted under BITs. “Kern is also accountable to its shareholders and after receiving an award, it has to do everything to strive for implementation,” he said.

“It’s a lot of money – at the end of the day you probably have to be aggressive,” said one of Kern’s 15 largest shareholders.

Rasmi Ranjan Das, joint secretary at the Ministry of Finance, told the Financial Times that New Delhi is still in dialogue with Kern. He said that “the government is open to an amicable settlement” but that it should be “within the Indian legal framework”. The government’s position is that the tax. . . Sovereign function.

He noted that Kern is still involved in legal proceedings over the tax dispute in India. He said Air India was a legally independent entity that “has no responsibility to make payments under the Kern arbitration award or any other alleged Indian debts or obligations”.

Kern said she had “full confidence” in her position.

Drilling rig in Cairn, Senegal

Implementation of the decision by a court in the Netherlands can lead to good returns for Cairn shareholders and revitalize the business

The lawyers suggest that the next logical step would be for India to file in New York to “remain” in Air India proceedings pending an appeal in the court process in The Hague.

The tax battle has taken a heavy toll on Kern, which had a stock value of more than £8 in 2012 when India’s law was introduced retroactively, but is now trading at around 165 pence, although the stock has also been affected by factors such as the oil price crash. in 2014 and 2020.

Aside from cutting staff and selling assets in the early years of the dispute, observers say uncertainty over the prize limited Cairn’s ability to compete for assets. Size is increasingly important to independent oil and gas companies that are outdated with stock markets.

“Everyone knows this [London-listed] Harbor Energy, Energy and this [larger independent oil and gas companies] “The winners will be because they will be big enough for investors to care about,” said Nathan Piper, an analyst at Investec.

Cairn’ has been trying to get in the business since 2015. . . . but they couldn’t really do that because of the uncertainty or not about whether or not I got a billion dollars.

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