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legal | IST

Cairn Energy secures French order to seize 20 Indian properties; govt calls for amicable solution

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Cairn Energy has secured a French court order to seize 20 Indian government properties to recover a part of its $1.7 billion arbitration award.

Cairn Energy has secured a French court order to seize 20 Indian government properties to recover a part of its $1.7 billion arbitration award. Following the reports of the order, the Indian government said it has already filed an application to set aside the December 2020 international arbitral award in the Hague court of appeal. Cairn too issued a clarification to CNBC-TV18.
The French court’s order to seize government properties is a significant one as it puts an end to the legal proceedings regarding seizing of Indian assets in France.
Confirming the reports, Cairn Energy said the order was a necessary pre-step to taking ownership of the properties and ensuring that proceeds of any sales would be due to Cairn. The Britain firm now has the legal power to dispose of these properties and take the sales proceeds as well.
Meanwhile, Cairn Energy said there is still a strong preference to amicably settle with the Indian government to draw this matter to a close, and that they have send a detailed series of proposals to the Finance Ministry.
Though the Finance Ministry initially said it has not received any notice, order or communication from any French court, it has now responded saying they are open for an amicable solution within the Indian legal framework.
However, Cairn has made it clear that if India does not agree to an amicable solution or does not agree to some of the proposal it has shared, then it will continue trying to enforce the $1.7 billion arbitral award in different jurisdictions.
The Britan-based firm earlier told CNBC-TV18 that it can enforce this arbitral award in 160 jurisdictions and take all legal means to do so.
According to a PTI report, on June 11, a French court had ordered Cairn Energy's take-over of Indian government properties, mostly comprising flat, and the legal process was completed on July 7 evening.
An arbitration panel had in December ordered the Indian government to return $1.2 billion plus interest and penalty to Cairn Energy after reversing a retrospective tax demand. With the Indian government not honouring the award, Cairn Energy has moved in multiple jurisdictions overseas to recover the amount due by seizing Indian government assets.
Giving their initial reaction to the French court order, Dinesh Kanabar, CEO, Dhruva Advisors said this is culmination of all the things that have been happening over the last 6-8 months ever since the order came from international court of arbitration.
“The key issue here is that we have this retrospective amendment, there is no question about the government’s right to tax a transaction,” he said, adding that the question is whether the taxation should be prospective or retrospective and where the arbitration tribunal came back to say that it is if result of a retrospective amendment is there is a loss which is occurring to an investor and that loss ought to be made good.
“That is which the Indian government has challenged in a court in Singapore. I do not know whether this one retrospective amendment which has caused such a lot angst and yielded hardly any revenues to the government, is worth it for the government’s while,” said Kanabar.
For the entire reaction interview, watch the accompanying video.
(With text inputs from PTI" at the end of the copy)