Hours after Britain's Cairn Energy Plc secured a French court order to seize 20 Indian government properties in Paris to recover a part of the USD 1.7 billion due from New Delhi following an arbitration panel overturning the levy of retrospective taxes, the Modi government on Thursday said that it has not received any notice, order, or communication, in this regard, from any French Court.
"There have been news reports that Cairn Energy has seized/frozen State-owned property of the Government of India in Paris. However, Government of India has not received any notice, order, or communication, in this regard, from any French Court," the Finance Ministry said in its statement.
"Government is trying to ascertain the facts, and whenever such an order is received, appropriate legal remedies will be taken, in consultation with its Counsels, to protect the interests of India," it said.
"Government has already filed an application on March 22, 2021 to set aside the December 2020 international arbitral award in The Hague Court of Appeal. Government of India will vigorously defend its case in Set Aside proceedings at The Hague," it explained further.
"The CEO and representatives of Cairns have approached Government of India for discussions to resolve the matter. Constructive discussions have been held and Government remains open for an amicable solution to the dispute within the country’s legal framework," the statement read.
The centrally located properties mostly comprise flats valued at more than EUR 20 million and were used by the Indian government establishment in France, three people with direct knowledge of the matter said.
The French court, Tribunal judiciaire de Paris, 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, they said adding the legal formalities for the same was completed on Wednesday evening.
While Cairn is unlikely to evict the Indian officials residing in these properties, the government cannot sell them after the court order.
A three-member international arbitration tribunal that consisted of one judge appointed by India, had in December last year unanimously overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.
With the Indian government refusing to honour the award, Cairn has moved in multiple overseas jurisdictions to enforce the award by seizing Indian assets.
Last month, Cairn brought a lawsuit in the US District Court for the Southern District of New York pleading that Air India is controlled by the Indian government so much that they are 'alter egos' and the airline should be held liable for the arbitration award.
Similar lawsuits are likely to be brought in other countries, primarily with high-value assets.
The arbitration award has been registered in countries such as the US, UK, Canada, Singapore, Mauritius, France and the Netherlands.
Cairn has identified USD 70 billion of Indian assets overseas for potential seizure to collect the award, which now totals USD 1.72 billion after including interest and penalty.
While the finance ministry did not immediately offer comments on the matter, a Cairn spokesperson said: "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," the spokesperson said without elaborating.
Sources said the French court order affects some 20 centrally located properties, belonging to the Indian government, as part of a guarantee of the debt owed to Cairn.
"This is the necessary preparatory step to taking ownership of the properties and ensures that the proceeds of any sales would be due to Cairn," one of the persons said.
Last month, Cairn filed a petition with the courts in the Southern District of New York, seeking judicial confirmation that Air India, the national carrier, can be classed as the alter ego of the Indian state and thereby jointly liable for the arbitral award.
Air India has time till mid-July to file a plea contesting the Cairn lawsuit, sources said.
The Government of India, which participated in the arbitration proceeding over four years, has not accepted the award and has filed a 'setting aside' petition in a court in the Netherlands - the seat of the arbitration.
The move by Cairn is similar to a court in the British Virgin Islands ordering in December last year hotels in New York and Paris owned by Pakistan International Airlines to be used to settle a claim against Pakistan's government by a Canadian-Chilean copper company.
Crystallex International Corp had brought a similar lawsuit to attach the property of Petroleos de Venezuela, S.A (PDVSA), the state-owned oil company of Venezuela, in Delaware a couple of years back after the Latin American country failed to pay the firm USD 1.2 billion that an arbitration tribunal had ordered to pay in lieu of the 2011 seizing gold deposits held and developed by the firm.
In 2012, Elliott Management, a buccaneering American hedge fund that held distressed Argentine bonds, seized a handsome tall ship belonging to Argentina's navy.
Recently, French courts ruled that a stifled creditor could seize a business jet belonging to the government of Congo-Brazzaville while it was being serviced at a French airport, as well as USD 30 million from a bank account of the country's state oil company.
In May, the finance ministry said that the tribunal "improperly exercised jurisdiction over a national tax dispute that the Republic of India never offered and/or agreed to arbitrate".
The ministry called the 2006 reorganisation of Cairn's India business for listing on the local bourses as "abusive tax avoidance scheme that was a gross violation of Indian tax laws, thereby depriving Cairn's alleged investments of any protection under the India-UK bilateral investment treaty".
The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan.
In 2006 it listed its Indian assets on the BSE.
Five years after that the government passed retroactive tax law and billed Cairn Rs 10,247 crore plus interest and penalty for the reorganisation tied to the flotation.
(With PTI Inputs)