A Scottish energy company has launched a lawsuit aimed at seizing state-owned Air India aircraft in an escalating tax dispute with the Narendra Modi government.
In one of a series of disputes between Western companies and New Delhi, Cairn Energy sued Air India to enforce a US$1.2 billion plus interest ruling, which is now worth more than US$1.7 billion.
The lawsuit was filed in southern New York on Friday to prove that Air India is “another self of the Republic of India and therefore bears joint and several liability for India’s own debts and obligations.”
This is a legal process that may lead to Cairn Energy’s attempt to seize aircraft and other assets as part of a long-term tax dispute, although negotiations on the case continue.
The Edinburgh company has identified a possible $70 billion in Indian-owned assets worldwide, including London.
If the New York case proves that Air India’s assets were exposed in the dispute, Kane Energy believes that it should set a precedent for other state-owned assets. New York’s legal system is the focus of the company’s work because it has a good track record in handling such international disputes.
British Prime Minister Boris Johnson has been pressured by the Labour opposition to support Cairn Energy and other companies in dispute with India.
The Labor Party claimed that Johnson remained silent because he was eager to reach a trade agreement with Modi. A Conservative Party official said he did not believe that Johnson brought up the Kane Energy case during a video conference with Modi this month.
Johnson agreed to establish an “enhanced trading partnership” during a video call with Modi, and both parties stated that they are seeking a complete free trade agreement to eliminate trade and investment barriers.
But some Western companies believe that the Modi government has not complied with existing commercial agreements. Vodafone, one of the UK’s largest companies, is caught in a complicated dispute with the Indian tax authorities, which demanded a repayment of 3 billion euros. The International Court of Arbitration ruled that Vodafone won the case, but New Delhi appealed the decision.
Devas, a satellite company located in India and the United States, has also been dragged into legal disputes with Indian authorities.
Labor trade spokesperson Emily Thornberry said: “Boris Johnson cannot defend the interests of British companies, but hopes that it can pave the way for a future trade agreement with India.
The British government expressed the hope that Kane Energy and the Indian government would “find a solution as soon as possible”, but the British government “has not commented on the legal procedures for which it is not a contracting party”. It is dedicated to helping British companies wishing to invest in India.
In December, an international court ordered India Pay $1.2 billion to Kane Regarding the retrospective tax dispute, New Delhi tried to levy taxes on the company. The Modi government challenged this process.
India’s Ministry of Finance did not respond to a request for comment, although local media quoted an anonymous official as saying that the Indian government will take all measures to defend itself.
According to a law passed in 2012, India retroactively required Cairn Energy to pay US$1.4 billion in taxes. Company related.
The arbitration tribunal found that India violated its obligations under the Anglo-Indian Bilateral Investment Treaty in 2014, when tax officials confiscated the remaining 10% of the Cairn Energy subsidiary and sold it to Vedan Tower (Vedanta).
Indian Finance Minister Nirmala Sitharaman postponed the court’s sentence last month.
Talking An event She is hosted by the British Financial Times and India Express. She said: “International arbitration questioning India’s sovereign tax rights is a concern. To a certain extent, we are worried that it sets a wrong precedent.”
Cairn Energy stated that “in the absence of an arbitration settlement, it is taking the necessary legal steps to protect the interests of shareholders”.