Cairn Power freezes Indian state-owned property in Paris

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Cairn Power stated it had successfully seized Indian state-owned properties in Paris, in a dramatic escalation of the battle between the Scottish oil producer and the federal government of Narendra Modi.

The motion by Cairn is the most recent try and pressure India to pay $1.7bn awarded by a global tribunal over a tax dispute.

Cairn, which has a market capitalisation of simply £752m and solely 180 workers, was awarded the sum final yr following a long-running arbitration.

It says it has recognized $70bn of property all over the world starting from buildings to Air India plane that it could attempt to seize so long as the Modi authorities refuses to pay.

Its asset freeze software in Paris is the primary to succeed. The corporate stated it could successfully switch the possession of 20 properties valued at greater than €20m, together with within the sixteenth and 14th arrondissements. Official paperwork seen by the Monetary Instances confirmed the French courtroom had authorised the freeze.

The technique is just like that of US hedge fund Elliott Capital Administration, which in 2012 seized an Argentine naval vessel in Ghana over a debt dispute. Cairn has even employed lawyer Dennis Hranitz, who labored on the Elliott dispute.

Cairn, which is predicated in Edinburgh and listed in London, has pushed for UK authorities assist to assist with its declare, however has grown pissed off on the gradual progress and the refusal of the Modi authorities to pay up. The UK authorities has aggressively pursued a post-Brexit commerce cope with India.

The oil group stated the freeze on the properties authorized by the French Court docket, Tribunal Judiciaire de Paris, was a “vital preparatory step to taking possession of the properties and ensures that the proceeds of any gross sales could be as a consequence of Cairn”.

Analysts say New Delhi’s unwillingness to honour the worldwide arbitration award and to as a substitute proceed to enchantment in opposition to the judgment in courtroom follows a sample of the Modi authorities’s refusal to acknowledge any errors in its governance. Any payout made now to Cairn could possibly be learn as a tacit acknowledgment of wrongdoing.

“This authorities is kind of clear — they can’t admit they made a mistake — even whether it is staring you within the face,” stated Partha Mukhopadhyay, a senior fellow at New Delhi’s Centre for Coverage Analysis, earlier this yr.

Underneath a legislation handed in 2012, India retroactively demanded $1.4bn in tax funds from Cairn Power associated to the UK group’s flotation of its Indian subsidiary on the Bombay Inventory Change in 2007.

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In December a Dutch arbitration tribunal discovered India had violated its obligations underneath the UK-India Bilateral Funding Treaty in 2014 when tax officers seized Cairn Power’s residual 10 per cent stake within the subsidiary, which it offered to Vedanta.

The Indian authorities didn’t reply to a request for remark.

“Our robust choice stays an agreed, amicable settlement with the federal government of India to attract this matter to an in depth,” Cairn stated, including it had submitted “an in depth sequence of proposals to them since February this yr”.

“Nevertheless, within the absence of such a settlement, Cairn should take all vital authorized actions to guard the pursuits of its worldwide shareholders.”

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