Cairn sues Air India over $1.2 billion arbitration award

Mumbai: Cairn Energy has sued India’s flagship carrier Air India to enforce a $1.2 billion arbitration award that it won in a tax dispute against India, according to a US District Court filing reviewed by Reuters.

The move ratchets up pressure on Indian government to pay the sum of $1.2 billion plus interest and costs that the British firm Cairn was awarded by an arbitration tribunal in December. The body ruled India breached an investment treaty with Britain and said New Delhi was liable to pay.

Cairn filed the lawsuit in the US District Court for the Southern District of New York, seeking to make Air India liable for the judgment that was awarded to Cairn. The lawsuit argued that the carrier, as a state-owned company, is “legally indistinct from the state itself”.

“The nominal distinction between India and Air India is illusory and serves only to aid India in improperly shielding its assets from creditors like (Cairn),” the filing said.

Air India did not immediately respond to comment requests.

Cairn’s move could potentially jeopardise India’s attempts to divest the state-owned carrier this year. New Delhi said in December that it had received multiple expressions of interest after it moved to privatise the loss-making entity.

Image courtesy of (File photo)

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