Cairn was awarded damages of over $1.2 billion plus interest and costs in a long drawn-out tussle over a tax dispute and the Indian government is now liable to make this payment
Cairn Energy has begun to take steps to identify Indian assets overseas against which it can enforce the $1.2 billion award it won last month in a treaty arbitration case against the South Asian nation, according to a letter seen by Reuters.
Cairn was awarded damages of over $1.2 billion plus interest and costs in a long drawn-out tussle over a tax dispute and the Indian government is now liable to make this payment. An Indian official, however, said at the time the government would likely challenge the order.
If India does not comply with the order it would be a violation of international rules on arbitral awards, commonly called the New York Convention, Cairn said in a letter addressed to the Indian High Commission in London.
A copy of the letter was also sent to the finance and external affairs ministries in New Delhi.
"As India is a signatory to the New York Convention, the award can be enforced against Indian assets in numerous jurisdictions around the world for which the necessary preparations have been put in place," Cairn said.
Cairn Energy declined to comment but referred to an earlier statement from Jan. 20 when the company said it was in talks with the Indian government regarding adherence to the tribunal's ruling and taking steps to protect its rights to the award.
India's finance and external affairs ministries did not immediately reply to a request for comment.
Cairn is looking to identify bank accounts and other assets, including potentially Air India planes and even Indian ships, that could be subject to seizure in the absence of a settlement, said a source with knowledge of the situation.
The company has registered its claim against the government of India in the Netherlands and France - essentially telling the regulators in the two countries that they may receive court orders for seizure of some Indian assets, the person added.
It is preparing to do the same in Canada and the United States, the person said.
Cairn, in its letter, warned that since the money ultimately belongs to its shareholders - which include large investors such as BlackRock, Fidelity and Franklin Templeton, the ramifications of India not honouring the award will "run across the international investment community more widely".
"Now that the award has been granted our shareholders expect early resolution, failing which they will expect Cairn to pursue the award in conformity with its rights under the treaty."
Cairn's full-year results will be announced on March 9 and it will be important for shareholders to have clarity in advance of that date, the company said.