Air India has until Mid-July to contest Cairn Lawsuit in US Court

Greeva Garg – 

Air India has been granted time till Mid-July to file the plea contesting Cairn Lawsuit in the US Court.

The lawsuit was filed by Britain’s Cairn Energy PLC seeking that the US Federal Court force the national carrier Air India to pay a USD 1.26 billion arbitration award it had won in a retrospective tax dispute against the Indian Government in December last year, sources said.

The lawsuit filed in US District Court in New York by Cairn stated that Air India is controlled by the Indian Government so much that they are “alter egos”.

The Cairn company demands the Court to hold the Indian Airline company liable for the Arbitration award.

A three-member international arbitration tribunal had ruled in favour of the oil major stating that the Indian Government was in ‘breach of the guarantee of fair and equitable trade treatment’ which was against the India-UK Bilateral Treaty which caused losses to the energy company. It awarded $1.26 billion in losses to Cairn which India is liable to pay.

The tribunal, which consisted of one judge appointed by India, in December 2020, unanimously rejected the levy of taxes on Cairn retrospectively and ordered a refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.

The Indian Government which had attended the arbitration proceedings for over four years did not accept the award and instead filed a ‘setting aside’ petition in a Court in The Netherlands —the seat of arbitration.

The Cairn company now seeks to recover the arbitration award from state-owned Indian entities such as Air India. Meanwhile, the Indian Government said it will contest any such enforcement.

The debt-laden airline, which itself is in dire straits is trying to search for buyers to rescue it, has until mid-July to file a plea contesting Cairn’s lawsuit in US Court.

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