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New Delhi: Cairn Energy and Air India have jointly asked a federal court in New York to stay further proceedings in the British firm’s US lawsuit targeting the airline for enforcing a USD 1.2 billion arbitral award Is.
According to court documents reviewed by PTI, the move comes after the government enacted a law to do away with retrospective taxation in the country, which would result in withdrawal of tax demand of Rs 10,247 crore on Cairn.
The British company had won an international arbitration award against the imposition of such a tax and sought to take possession of Air India’s assets when the government refused to honor the award and was given a US$1.2 billion plus interest and fine. paid.
But, last month, the government enacted the Taxation Laws (Amendment) Act, 2021, which quashes all such retrospective tax demands and agreed to refund the Rs 7,900 crore seized from Cairn for implementing such demand. has gone.
Cairn has indicated that refunds without interest and penalty were acceptable, paving the way for settlement of the seven-year-old dispute.
Cairn and Air India said in a joint request to US District Judge Paul Gardefe on September 13 that the stay on proceedings would give them “extra time to evaluate the effects and implications” of the law that repealed the retrospective tax.
In return for Rs 7,900 crore, Cairn will drop court-ordered lawsuits threatening to confiscate Indian government assets abroad.
One of those suits was filed in May against state-owned Air India Ltd, which Cairn has said should be considered as an alter ego of the Indian government.
“Implementation rules are in the process of making rules and it will take some time,” said the two in the petition, seeking an extension of the October 21 deadline for presentation of case papers and a preliminary pretrial conference on October 28.
They requested the court to “stay further proceedings in the matter until October 31, 2021, and to reschedule the preliminary pre-trial conference and, respectively, to the parties in their joint pre-trial letter and proposed The deadline for submission of the case management plan for the new dates should be fixed, November 2021.”
“The parties have honored and agreed that the adjournment will facilitate the efficient resolution of the dispute, conserve the resources of the Court and the parties, and is not intended to hinder or delay,” he said.
Cairn filed a suit in the District Court of New York on May 14, holding Air India liable as the alter ego of the Republic of India for the government’s obligations under a foreign arbitral award. The firm filed a separate petition before the District Court for the District of Columbia to recognize and enforce the arbitration award against India on February 12, 2021.
Seeking to repair India’s damaged reputation as an investment destination, the government last month filed outstanding claims against telecom conglomerate Vodafone, pharmaceuticals company Sanofi and brewing subsidiaries, now owned by AB InBev and Cairn. A new law has been made to release Rs 1.1 lakh crore. .
Around Rs 8,100 crore collected from companies under the repealed tax provision is to be refunded if the firms agree to drop the outstanding litigation including interest and penalty claims. Of this, Rs 7,900 crore is due only to Cairn.
In December, an international arbitration tribunal reversed the Rs 10,247 crore tax on Cairn’s restructuring of its Indian business before its listing in 2006. It also asked the Indian government to refund the forfeited and sold shares, forfeited dividends and tax refunds. This totaled more than US$1.2 billion in interest and penalties.
The government initially refused to honor the award, forcing Cairn to recognize US$70 billion of Indian assets in Singapore from the US, including taking flag carrier Air India Ltd to a US court in May . In July a French court paved the way for Cairn to confiscate immovable property belonging to the Indian government in Paris.
Cairn CEO Simon Thomson told PTI earlier this month that all these litigations would be dropped after payment of Rs 7,900 crore.
Read also: Cairn to drop case against India after getting refund of $1 billion, says CEO Simon Thomson
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