- Saturday, April 20, 2024
By: Shubham Ghosh
AIR India has asked a court in New York to quash a petition by Britain’s Cairn Energy for seizure of its assets to enforce $1.2 billion arbitral awards against the Narendra Modi government, saying the litigation was premature since an appeal against the arbitration was still pending.
The airline’s petition, which is separate from the Indian government’s plea in a court in Washington demanding dismissal of Cairn’s lawsuit to seek confirmation of the arbitral award, said the New York district court did not have the jurisdiction to adjudicate a “mere hypothetical question” or one that depends upon contingent future events that may or may not occur, Press Trust of India reported.
Cairn had first moved a court in the US district court for the District of Columbia seeking confirmation of the arbitration award and subsequently filed a petition in the New York court to seek declaration of Air India as “alter ego” of the Modi government and hence it should be made liable to pay the $1.26 billion arbitral award.
In December last year, an international arbitration tribunal set aside the levy of capital gains tax, using a 2012 retrospective legislation, on a reorganisation of India business from 2006 that Cairn carried before listing on local stock exchanges.
It asked India to return the value of shares seized and sold, dividend confiscated and tax refund withheld to enforce levy. When India refused to pay, Cairn moved American courts.
“Cairn’s petition to confirm the Award is pending in the District Court for the District of Columbia,” Air India said in the August 23 petition seen by PTI.
It also said that the Indian government has filed before a court in The Hague — the seat of the international arbitration tribunal — a Motion to Stay and a Motion to Dismiss the arbitral award.
“In effect, the Complaint (by Cairn Energy) is a premature enforcement action dressed up as a declaratory judgment action, invoking this Court’s federal jurisdiction to get a head start on executing the Award before the D.D.C. has had the opportunity to address the Republic of India’s immunity defenses and its claims that the Award is not subject to enforcement under the New York Convention,” Air India said, adding, “Such an attempt is improper, and the Complaint should be dismissed.”
It sought dismissal on three counts — first because the court lacks jurisdiction “to issue a declaratory judgment because the alleged controversy is not ripe”, secondly because “Air India is immune from suit because none of the exceptions to sovereign immunity under the Foreign Sovereign Immunities Act (FSIA) applies to a premature collection proceeding of a hypothetical judgment”, and thirdly because “the Complaint, which presupposes an enforceable judgment that does not exist, fails to allege a cognizable cause of action.”
Earlier this month, the Indian government had also asked the US district court for the District of Columbia to dismiss the case, arguing that it lacks jurisdiction since the country never agreed to arbitrate tax disputes.
