LE Desk

New Delhi, July 8, 2021: A French court has permitted Cairn Energy to freeze several India-owned assets in Paris towards the settlement of the international arbitration order, the Financial Times reported.

The order allows Cairn to take over 20 properties of the Government of India valued at more than 20 million euros. This comes following India’s protracted refusal to abide by the arbitration order that asked the Indian government to pay Cairn $1.2 bn in damages, plus interest and costs.

Cairn will effectively transfer the ownership of the 20 properties, including those in the 16th arrondissement in Paris, the report quoted the company as saying.

The French court, Tribunal judiciaire de Paris, had on June 11 agreed to Cairn’s application to freeze (through judicial mortgages) residential real estate owned by the Government of India in central Paris. The legal formalities for the same was completed on Wednesday evening, PTI reported.

Cairn is unlikely to evict the Indian officials residing in those properties. But the government cannot sell them after the court order.

At the end of 2020, the arbitration award amounted to $1.7 billion. The Indian government had appealed against the award.

The international arbitration court had specifically made clear that the basis of the judgment was not a challenge India’s 2012 law, which gave the government powers to tax deals retrospectively, or India’s sovereign right to tax.

As per the arbitration panel ruling, the award can be enforced against India’s overseas properties located in over 160 nations that are signatories to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

In the wake of India’s refusal to go by the award, Cairn had moved courts in the US, UK, Netherlands, Canada, France, Singapore, Japan, UAE and Cayman Islands to get the case registered and recognised.

The feud with Cairn had begun six years ago when the Indian government demanded capital gains tax of Rs 10,200 crore plus interest and penalty for an asset restructuring that the company did at its India arm in 2006, ahead of the listing of its shares in 2007.

An official Indian assessment done in 2014 reached the conclusion that Cairn had made capital gains on reorganising its India business prior to its IPO. Cairn, on the other hand, maintained all along that its restructuring was wholly in compliance with the laws in force during that time.

Around the time Cairn filed its latest petitions, the Indian government had directed state-run banks to safeguard their dollar deposits for fear that they could be seized.

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