Indian state-owned properties in Paris frozen as tax dispute with Cairn escalates
Cairn Energy claims to have effectively seized Indian state-owned properties in Paris in an attempt to force the country to pay $1.7 billion awarded last year by an international tribunal in The Hague, the Financial Times reports.
Its application in France is the first to succeed and the company said it was a “necessary preparatory step to taking ownership of the properties and ensures that the proceeds of any sales would be due to Cairn”.
The freeze, which has been authorised by the Tribunal Judiciaire de Paris, could see ownership of 20 properties valued at more than €20 million transferred to the Edinburgh-based company.
The dispute began following the passage of a tax law in 2012 under which India demanded $1.4bn in retrospective payments from Cairn over the UK group’s 2017 flotation of its subsidiary on the Bombay Stock Exchange.
The tribunal in The Hague determined that when Cairn’s residual 10 per cent stake in the subsidiary was seized by tax officials and sold to Vedanta, India was in breach of its obligations under the 2014 UK-India bilateral investment treaty.
India’s Finance Ministry said it had received no notice from the French court but that it was “trying to ascertain the facts” and would commence legal action to “protect the interests of India”.
Tim Portwood, of French law firm Bredin Prat, said that “India will almost certainly be able to claim sovereign immunity” over assets that are used for sovereign purposes.
“If they’re being sensible about this on Cairn’s side, they would be looking for assets worldwide to see what it is that they can seize,” he added.
But Cairn’s lawyer, Isabelle Michou, of Quinn Emanuel Urquhart & Sullivan in Paris, said that “none of the properties subject to the Paris court order is protected by sovereign immunity. These properties are not associated with diplomatic functions but merely fall within private law management of real estate investment.”