Air India has asked a New York court to dismiss a petition filed by Cairn Energy of the United Kingdom to seize its assets to enforce USD 1.2 billion arbitral awards. Cairn initially sought confirmation of the arbitration judgment in the U.S. District Court for the District of Columbia and then filed a case in a New York court demanding designation of Air India as a “alter ego” of the Indian government, making it responsible for paying the USD 1.26 billion arbitral award.
In December of last year, an international arbitration panel overturned the imposition of capital gains tax on a 2006 restructuring of Cairn’s India company before it was listed on local stock markets, based on 2012 retrospective law. It ordered India to restore the value of shares seized and sold, confiscated dividends, and withhold tax refunds to implement the charge.
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Cairn took legal action in the United States because India refused to pay. In the August 23 petition, Air India stated, “Cairn’s motion to affirm the Award is pending in the District Court for the District of Columbia.” It said, “The Indian government has filed a Motion to Stay and a Motion to Dismiss the arbitral judgement before a court in The Hague, the headquarters of the international arbitration tribunal.”
The Indian government had requested the U.S. District Court for the District of Columbia (D.D.C.) to dismiss the lawsuit earlier this month, claiming that the court lacked jurisdiction since the nation has never agreed to arbitrate tax issues. Meanwhile, New Delhi’s case in the Netherlands to get the award overturned is still ongoing. The government invoked safeguards provided by the U.S. Foreign Sovereign Immunities Act of 1976 in its dismissal petition submitted on August 13 before DCC. “India never “clearly and unmistakably” barred judicial review or assigned sole authority to determine these matters to an arbitral tribunal,” said to the petition, suggesting that Cairn could not fulfil any exemption to sovereign immunity under U.S. law.
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