The Finance Ministry on Thursday, 8 July, said that it has received no communication from any French court on British gas and oil firm Cairn Energy's seizure of Indian government assets in a tax dispute case, adding that both parties are in discussions to resolve the matter.
"There have been news reports that Cairn Energy has seized/frozen State-owned property of the Government of India in Paris. However, Government of India has not received any notice, order, or communication, in this regard, from any French Court."Finance Ministry, as per ANI
The ministry has also said that it has filed an application dated 22 March 2021 to dismiss the December 2020 international arbitral award in The Hague Court of Appeal.
"Government of India will vigorously defend its case in Set Aside proceedings at The Hague," ANI quoted the ministry as saying.
It further added:
"The CEO and representatives of Cairns have approached Govt of India for discussions to resolve the matter. Constructive discussions have been held and Government remains open for an amicable solution to the dispute within the country’s legal framework."Finance Ministry, as per ANI
Paris Tribunal Lets Cairn Energy Seize Govt Assets
As part of enforcing the $1.7 billion arbitration award on the Indian government, Cairn Energy effectively took over around 20 government properties in Paris as per an order by a court in Paris, sources told PTI earlier during the day.
The French court's order dated 11 June has reportedly directed Cairn Energy to seize Indian government properties, mostly comprising buildings, PTI reported.
India had lost arbitration proceedings in December 2020 and was directed to pay $1.2 billion plus taxes to the oil and gas firm, which after penalties and interests, now amounts to about $1.7 billion.
According to Cairn, the freeze on the official properties approved by Tribunal Judiciaire de Paris was "a necessary preparatory step to taking ownership of the properties and ensure that the proceeds of any sales would be due to Cairn," Financial Times reported.
Central Government's Refusal to Pay
The Narendra Modi government has swayed from honouring the award in the past, with Cairn Energy moving in several international jurisdictions to recover the due amount by seizing Indian government assets.
Since January this year, Cairn had begun attempts to identify these assets abroad against which it could enforce the award. These assets include aircraft, ships, and even bank accounts.
"This government is quote clear, they cannot admit they made a mistake," a senior fellow at New Delhi's Centre for Policy Research had said earlier in 2021, Financial Times quoted.
The Case
Cairn Energy had in 2010-11 sold Cairn India to Vedanta. Post the merger of Cairn India and Vedanta in April 2017, the UK firm's shareholding in Cairn India was replaced by a shareholding of about 5 percent in Vedanta, issued together with preference shares, according to IANS.
Along with attaching its shares in Vedanta, the tax department seized dividends of around Rs 1,140 crore due to it from the shareholdings and set off a Rs 1,590 crore tax refund against the demand.
In 2015, Cairn initiated an international arbitration to challenge retrospective taxation.
After the ruling, Cairn said that the tribunal has awarded damages of $1.2 billion along with interest and costs.
(With inputs from Financial Times, IANS, PTI, and ANI)
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