Cairn Energy Dispute: Legal Experts Say an Immediate Stay on the Award is of Utmost Importance
As reported by Money Control, Cairn Energy Plc of the UK has initiated the process of seizing Indian assets abroad after its win against India in the controversial tax dispute case.
According to experts, an appeal should immediately be filed given the ruling by the International Court questions India's sovereign right to tax and a stay on the company’s move to seize assets must also be looked into.
Finance Minister Nirmala Sitharaman has already indicated that India is likely to appeal against the judgement by the International Court.
In December 2020, a Permanent Court of Arbitration at The Hague had ruled that a case of retrospective tax was wrongly applied to the company and held the Indian government should pay damages worth $1.2 billion to Cairn Energy.
The court cited that the claim by the India government was “in breach of the guarantee of fair and equitable treatment”. The total dues that India owes to the company, including interests, amounts to around $1.7 billion.
Cairn Energy in its annual report stated that the award is enforceable against India-owned assets in over 160 countries that have signed and ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Consequently, the company has moved courts in the US, the UK and three other countries with a view to seizing Indian assets, including bank accounts in those countries.
Advocating the need for an immediate appeal and stay on the company's plan to seize assets, Tejveer Singh, Managing Partner, Singh & Singh Law Firm LLP, as quoted by Money Control has said, "the panel in Cairn Energy’s matter has held that Parliament's laws cannot be applied retrospectively. This itself ought to be appealed as it questions the sovereign right of India to levy taxes. An immediate stay on the award is of utmost importance to India's interest at present,”
Abhishek Malhotra, Managing Partner, TMT Law Practice, highlighting the legal options before the Indian government has said, "Mere filing of a challenge will not ensure any relief...Unless an Indian court stays the award, India will not be able to mount an effective defence against Cairn’s proposed action in countries where the Indian government has sovereign assets as Cairn has already started approaching the courts for registering the award for execution."
