Air India Refuses Arbitration Case Filed By Cairn Energy Calling Itself Private Entity
Air India is being sued by Britain’s Cairn Energy PLC as the latter terms it as the government’s alter-ego and therefore is forced to pay any liability owned by the government. But moving its case on point, Air India has plans to show how it is in the process of being privatized and therefore does not see itself as the government’s alter ego with any obligations attached.
In order to make its case, Cairn has declared that it will recover the amounts due to it by targeting assets of state-owned firms and banks in countries from the US to Singapore. It has won an arbitration case against the Indian airline where the latter owes the British entity as much as $1.2 billion plus interest and penalties on behalf of the Indian government.
In the month of May this year, Cairn had brought a lawsuit in the US District Court for the Southern District of New York pleading that Air India was to pay for Indian government’s lapses.
The government of India, despite participating in the arbitration proceeding over four years, has not accepted the award and has filed a ‘setting aside’ petition in a court in Netherlands – the seat of the arbitration. But reeling under pressure from its own stakeholders, Cairn Energy PLC will be compelled to pass on the pressure and has filed arbitration award proceedings to be carried out in the UK, US, Netherlands, France, Canada and Singapore.
Meanwhile, the British company has already identified $70 billion of Indian assets overseas for potential seizure to collect award. After adding up the interest and penalties, Air India would need to pay up a total of $1.72 billion. The move is similar to a court in the British Virgin Islands ordering in December last year hotels in New York and Paris owned by Pakistan International Airlines to be used to settle a claim against Pakistan’s government by a Canadian-Chilean copper company.
Once recognized by the related courts, Cairn Energy will move ahead to do the needful. Related assets, sources confirm comprise Air India’s planes to vessels belonging to the Shipping Corporation of India, and properties owned by state banks to oil and gas cargoes of PSUs. The national flag carrier has time till mid-July to file a plea contesting Cairn lawsuit.