Air India Asks US Court To Dismiss Cairn Petition, Says It Is Premature

Air India has requested a New York courtroom to dismiss a petition filed by Britain’s Cairn Energy for seizure of its belongings to implement USD 1.2 billion arbitral awards in opposition to the Indian authorities, saying the litigation was untimely as an enchantment in opposition to the arbitration award was nonetheless pending. The petition by the airline, which is separate to the Indian authorities’s plea in a Washington courtroom in search of dismissal of Cairn’s lawsuit to hunt affirmation of the arbitral award, stated the New York district courtroom lacks jurisdiction to adjudicate a “mere hypothetical question” or one which relies upon upon contingent future occasions which will or could not happen. 

Cairn first moved a courtroom within the US District Court for the District of Columbia in search of affirmation of the arbitration award after which filed a petition within the New York courtroom to hunt declaration of Air India as “alter ego” of the Indian authorities and so it must be made liable to pay the USD 1.26 billion arbitral award. An worldwide arbitration tribunal in December final 12 months put aside the levy of capital positive factors tax, utilizing a 2012 retrospective laws, on a 2006 reorganization of India enterprise that Cairn carried earlier than itemizing it on native inventory exchanges. It ordered India to return the worth of shares seized and bought, dividend confiscated and tax refund withheld to implement levy. 

With India refusing to pay, Cairn moved courts within the US. “Cairn’s petition to confirm the Award is pending in the District Court for the District of Columbia,” Air India stated within the August 23 petition seen by PTI. It went on to state that the Indian authorities has filed earlier than a courtroom in The Hague — the seat of the worldwide 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 stated.

“Such an attempt is improper, and the Complaint should be dismissed.” It sought dismissal on three counts – first as a result of the courtroom lacks jurisdiction “to issue a declaratory judgment because the alleged controversy is not ripe”, second “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 third “the Complaint, which presupposes an enforceable judgment that doesn’t exist, fails to allege a cognizable explanation for motion.”

The Indian government had earlier this month asked the US District Court for the District of Columbia (DDC) to dismiss the case, arguing that it lacks jurisdiction since the country never agreed to arbitrate tax disputes. Meanwhile, litigation filed by New Delhi in the Netherlands to have the award set aside also remains pending. “Cairn asks this courtroom to challenge a declaration that Air India, as alleged alter ego of , shall be liable on a judgment that doesn’t, and should by no means, exist,” the airline said in the August 23 petition.

“Unless and till the courtroom within the Cairn affirmation motion determines the brink query of the enforceability of the award in opposition to (India), whether or not Cairn can then implement that judgment in opposition to Air India beneath an alter ego concept is solely tutorial and never ripe for adjudication.” This comes within weeks of the government enacting legislation to scrap the tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas, but business assets were in India. That rule had been used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities, including Rs 10,247 crore on Cairn. The Indian government and Air India are defending their positions as rules for withdrawal of such tax demands are in the process of being framed.

“One of the necessities for the dropping of the retrospective tax calls for is that the events involved have to provide an endeavor for withdrawal of all instances in opposition to the federal government/tax division. So, whereas all that is in course of, the federal government is obligated to reply in any authorized matter the place there’s a time bar for doing so,” an official explained. The government in the dismissal motion filed on August 13 before DCC, cited protections afforded by the US Foreign Sovereign Immunities Act of 1976.

India in the filing said the court “lacks subject-matter jurisdiction beneath the FSIA as a result of India by no means waived its sovereign immunity and, likewise, by no means supplied – not to mention agreed – to arbitrate the current dispute with Petitioners”. “India additionally by no means “clearly and unmistakably” excluded judicial evaluate or delegated unique competence to resolve these inquiries to an arbitral tribunal”, implying that Cairn could not fulfill any exception to sovereign immunity beneath the US regulation, the submitting stated.


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