European oil and gas company Cairn Energy is reportedly now identifying potential Indian overseas assets that it can seize to cover the $1.2 billion owed to it by the Indian government.
Cairn Energy was awarded the amount as damage compensation plus interest and the cost of the drawn-out litigation in a treaty arbitration case last month. The case was over a tax dispute with the Indian government. Officials said that the government will likely challenge the decision.
Cairn said in a letter addressed to the Indian High Commission that if the county does not pay up or comply with the order, it would be a direct violation of the international rules on arbitral awards, also known as the New York Convention. Cairn reportedly also sent copies of the letter to India's finance and external affairs ministries.
"As India is a signatory to the New York Convention, the award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place," Cairn said in the letter.
There was no immediate response from the Indian government.
Sources with knowledge in the matter said that Cairn is currently looking at Indian government bank accounts and other assets such as planes and ships. The assets could be subject to seizure if the two parties cannot reach a settlement, the sources said.
Cairn has reportedly registered its claim against the Indian government in France and the Netherlands, effectively informing regulators in the country that they may soon receive court orders for the seizure of Indian-owned assets. The same sources said that Cairn is preparing to do the same in the U.S. and Canada.
Cairn said in its letter that India's refusal to honor the award could have serious ramifications "across the international investment community. The company said that the money owed to it by the government ultimately belongs to its shareholders, which includes international companies such as Franklin Templeton, Blackrock, and Fidelity.
"Now that the award has been granted our shareholders expect an early resolution, failing which they will expect Cairn to pursue the award in conformity with its rights under the treaty," Cairn said.
