Cairn Energy Seizes 20 Indian Govt Properties In France, Says Report

The centrally located properties mostly comprise of flats, valued at more than EUR 20 million, were used by Indian government establishment in France.

New Delhi: In the ongoing tussle, Britain's Cairn Energy secured an order from the French court to seize around 20 government properties in Paris to recover a part of the $1.7 billion due from New Delhi.

Which properties are to be seized?

The arbitration panel gave the order overturning the levy of retrospective taxes, as per the news agency PTI. The centrally located properties mostly comprise of flats, valued at more than EUR 20 million, were used by Indian government establishment in France.

What is the French court order?

Earlier, the French court agreed to Cairn's application to freeze (through judicial mortgages) residential real estate owned by the Indian government in central Paris. The legal formalities have been completed on Wednesday. Even as Cairn is unlikely to evict the Indian officials residing in those properties, the government will not be in the position to sell them after the court order, as per the PTI report.

While the three-member international arbitration in December ordered the Indian government to return $1.2 billion-plus interest and penalty to Cairn Energy after overturning a retrospective tax demand.

As the Indian government refused to honour the award, Cairn approached multiple overseas jurisdictions to enforce the award by seizing Indian assets.

What's India's stand?

The ministry called the 2006 reorganization of Cairn's India business for listing on the local bourses as an "abusive tax avoidance scheme that was a gross violation of Indian tax laws, thereby depriving Cairn''s alleged investments of any protection under the India-UK bilateral investment treaty".

In June, Cairn filed a lawsuit in the US District Court for the Southern District of New York pleading that Air India is controlled by the Indian government and the airline should be held liable for the arbitration award.

Similar lawsuits are likely to be brought in other countries, primarily with high-value assets. The arbitration award has been registered in countries such as the US, UK, Canada, Singapore, Mauritius, France and the Netherlands.

In this connection, the oil producer also identified $70 billion of Indian assets overseas for the potential seizure to collect the award, which now totals to $1.72 billion after including interest and penalty.