Cairn Energy said it had effectively seized Indian state property in Paris, in a dramatic escalation of the fight between the Scottish oil producer and the government of Narendra Modi.
Cairn’s action is the latest attempt to force India to pay $ 1.7 billion awarded by an international tribunal for a tax dispute.
Cairn, which has a market capitalization of just £ 752 million and just £ 180 employees, was awarded the sum last year after a long-running arbitration.
He says he has identified $ 70 billion in wealth in the world ranging from buildings to Air India aircraft that he could try to seize as long as the Modi government refuses to pay.
Its axis freeze application in Paris is the first to succeed. The company said it would effectively transfer ownership of 20 properties valued at more than 20 million euros, including in the 16th and 14th arrondissements. Official documents viewed by the Financial Times have confirmed that the French court has authorized the freeze.
The strategy is similar to that of US hedge fund Elliott Capital Management, which in 2012 took an Argentine naval vessel to Ghana for a debt dispute. Cairn also partnered with attorney Dennis Hranitz, who worked on the Elliott dispute.
Cairn, which is based in Edinburgh and listed in London, has pushed for support from the UK government to help with its claim, but has become frustrated by the slow progress and the government’s refusal to pay. The British government has aggressively pursued a post-Brexit trade deal with India.
The oil group said the freezing of properties approved by France’s Paris Judicial Court was a “preparatory step necessary to take possession of the properties and ensure that the proceeds of any sale are due to Cairn”.
India’s finance minister said on Thursday that he had not received any warnings from the French court, but that he was “trying to find out the facts” and would take legal action to “protect India’s interests”.
New Delhi is appealing the international arbitration ruling, but the finance minister has said he remains open to “a friendly solution to the dispute”.
Analysts say New Delhi’s unwillingness to abide by the international arbitration ruling follows a pattern of the government’s refusal to acknowledge any errors in its governance. Any payment made now to Cairn could be read as a tacit acknowledgment of wrongdoing.
“This government is pretty clear – they can’t admit they made a mistake – even if you look them in the face,” said Partha Mukhopadhyay, a senior senior at New Delhi’s Center for Policy Research, recently.
Under a law passed in 2012, India has retroactively demanded $ 1.4 billion in tax payments from Cairn Energy in connection with the British group’s floating of its Indian subsidiary on the Bombay Stock Exchange in 2007.
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In December, a Dutch arbitration tribunal found that India had breached its obligations under the UK-India Bilateral Investment Treaty in 2014 when tax officials seized the remaining 10% stake. of Cairn Energy in the subsidiary, which sold to Vedanta.
“Our strong preference remains a consensual and friendly agreement with the government of India to put an end to this matter,” Cairn said, adding that he had submitted “a detailed series of proposals since February of this year.”
“However, in the absence of such an agreement, Cairn must take all necessary legal action to protect the interests of its international shareholders.”