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Stay request on further proceedings seeked by Cairn Energy and Air India to New York Federal Court


REVIEWER: Arfeen Sayyed

September 16, 2021: A stay request on further proceedings has been asked by Cairn Energy and Air India to New York federal court in the British firm's US lawsuit for enforcement of an arbitration award that targets the airline.

The British company had won foreign arbitration award against charge of such taxes and sought to require Air India assets when the government refused to honour the award and pay it USD 1.2 billion in addition to interest and penalty. The Taxation Laws (Amendment) Act, 2021, was enacted by the government in the previous month that get rid of all such retrospective tax demands and has agreed to refund Rs 7,900 crore it had laid hold of from Cairn to enforce such demand.

An appeal has been made to US District Judge Paul Gardephe by Cairn and Air India on September 13 and requested that a stay proceeding would give them “additional time to measure the effects and implications” of the new amended act. Cairn will drop all the lawsuits intimidating court-ordered seizures of Indian government property abroad after repayment of the Rs 7,900 crore. One of those suits was filed in May in contrary to state-owned Air India Ltd, which Cairn has said should be considered confidant of the Indian government.

They requested the court to “stay any longer proceedings during this matter through October 31, 2021, and reschedule the inceptive pretrial and, also the deadline for the parties to present their Proposed Case Management Plan Joint Pretrial Letter.”

On May 14, Cairn proposed a lawsuit within the New York district court to held Air India accountable for the obligations the government owes under an international arbitration award. Before the District Court for the District of Columbia an individual petition was filed by the concern to acknowledge and enforce the arbitration award against India on February 12, 2021.

The levy of Rs 10,247 crore in taxes has been overruled by an international arbitration tribunal on a 2006 reorganisation of Cairn's India business before its listing. It also asked the Indian government to return the worth of shares seized and sold, dividend impounded and tax refund retained. This totalled USD 1.2 billion in addition to interest and penalty.

The government in the first instance refused to honour the award, forcing Cairn to spot USD 70 billion of Indian assets from the US to Singapore to enforce the ruling, accompanying flag carrier Air India Ltd to a US court in May

Cairn CEO Simon Thomson had assured PTI earlier this month that all these suits will be dropped once Rs 7,900 crore is paid.


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