Cairn Energy acts to enforce award against India’s overseas assets

Cairn Energy has registered in some countries the arbitration award it won against India in a retrospective tax case, a first step before it can petition court to enforce the award against Indian assets overseas, as per people close to the company.

In December, an arbitration tribunal ruled in favour of Cairn Energy in a six-year-old retrospective tax dispute and ordered the Indian government to pay the UK firm damages of $1.2 billion plus interest and cost. Cairn is seeking to enforce the award while the Indian government is preparing to appeal it.

For the implementation of the arbitration award, it must be registered at a court in a country relevant to the parties and the arbitration agreement. Cairn has registered the award in nearly half a dozen countries including the US and the UK and is in the process of registering it in a few more countries.

After the registration, the next step is the confirmation of award by the court following which the petitioner can seek to enforce it against the losing party’s assets. In January, Cairn had warned it could seize Indian assets overseas to enforce the award. On February 12, Cairn had filed a suit in a US court to confirm the award. The court issued summons to India on February 16.

Cairn has been mounting pressure on the government to pay up and bring the dispute to a quick close. Cairn’s CEO Simon Thomson met with top finance ministry officials in New Delhi last month but received no promise of closure. On Friday, finance minister Nirmala Sitharaman said it was her duty to appeal the arbitration award. The dispute with Cairn started six years ago after the government demanded capital gains tax of Rs 10,200 crore plus interest and penalty.

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