Cairn vs. India: French Court orders to seize 20 Indian Assets located in Paris

In a legal setback to India - Tribunal Judiciaire de Paris, the French Court has ordered to seize around twenty properties - mostly residential estates located in Central Paris belonging to the Indian Government which was previously frozen via. Judicial mortgages on the request of Cairn Energy back on June 11, adding that the legal formalities are completed by Wednesday evening.

This legal move from Cairn Energy, an Oil Company based in Britain - will result in the recovery of the part of $1.7 Billion due from the Indian Government. As per the sources, the to-be-seized, centrally located residential properties mostly comprising flats, which were used by the Indian Government Establishment present in Paris, value more than EUR 200 Million. While the Britain Company is unlikely to evict the Indian officials residing in those properties, the Government cannot sell them after the Court order.

It is a long ongoing legal battle between the Britain Company and the Government of India over a decade, in a tax-dispute case concerning the allegation by the Government on Cairn Energy, on the account of "an abusive tax avoidance scheme that was a gross violation of Indian Tax Laws, thereby depriving Cairn's alleged investments of any protection under India-UK bilateral investment treaty".

  1. It actually began when there was an internal group reorganization carried out by the company in 2006 which resulted in a tax liability of Rs. 10,247 crores as per the assessments made by India's Income Tax Department.

2. Income Tax Department concluded that Cairn UK made a Capital gain of Rs. 24,503 crores. Hence the company launched an international arbitration to challenge retrospective taxation.

3. A three-member international arbitration tribunal which included one Judge appointed by the Government of India then unanimously turned down the levy of taxes on Cairn Energy and ordered the Indian Government to refund the sold shares withheld tax refunds, and confiscated dividends to help begin recovery of loss to the company.

Cairn has identified $70 Billion of overseas assets, which belong to India for the potential seizure to claim the recovery benefits, where the penalty and interests account totally to $1.72 Billion.

“Our strong preference remains an agreed, amicable settlement with the Government of India to draw this matter to a close, and to that end, we have submitted a detailed series of proposals to them since February this year. However, in the absence of such a settlement, Cairn must take all necessary legal actions to protect the interests of its international shareholders.”

— Spokesperson, Cairn Energy Plc.

The Company seemingly to have brought lawsuits in other countries where high-valued assets belonging to the Indian Government are located. Also, they have sought in a lawsuit filed in the US District Court for the Southern District of New York that Air India Airlines should be held liable for the award of arbitration. US, UK, Canada, Singapore, Mauritius, France, and the Netherlands are the countries where the arbitration awards are registered.

Many similar legal interventions taken by Multinational Conglomerates against the Governments to settle tax and arbitration reward settlement issues have happened in Asian countries and Latin American countries as well. The Indian Government has not accepted the award and has filed a 'delay' petition in a Netherlands court, the arbitration seat.

Cairn Energy Plc, the Oil company invested in the Oil and Gas sector in 1994. The group found a large oil discovery in Rajasthan, a decade later. The company has listed its assets in BSE (Bombay Stock Exchange) in 2006. It was in the year 2011, under the new retroactive tax law, Cairn Energy was slapped with a massive amount of Rs. 10,247 crore plus interest and penalty for the reorganization tied to the floatation.

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