Cairn Energy freezes Indian state properties in Paris

Cairn Energy said it had effectively confiscated Indian state property in Paris, in a dramatic escalation of the fight between the Scottish oil producer and the government of Narendra Modi.

Cairn’s action is the latest attempt to force India to pay $ 1.7 billion granted by an international tribunal for a tax dispute.

Cairn, which has a market capitalization of just £ 752 million and just 180 employees, received the sum last year after a long arbitration.

He says he has identified $ 70 billion in assets around the world ranging from buildings to Air India planes that he can try to confiscate as long as the Modi government refuses to pay.

Its asset freeze app in Paris is the first to be successful. The company said it would effectively transfer ownership of 20 properties valued at more than 20 million euros, including districts 16 and 14. Official documents seen by the Financial Times confirmed that the French court had authorized the freeze.

The strategy is similar to that of US hedge fund Elliott Capital Management, which in 2012 seized an Argentine naval vessel in Ghana over a debt conflict. Cairn has even hired lawyer Dennis Hranitz, who worked on the Elliott dispute.

Cairn, based in Edinburgh and listed in London, has enlisted the support of the UK government to help with its claim, but has been frustrated by the slow progress and refusal of the Modi government to pay. The UK government has aggressively pursued a post-Brexit trade deal with India.

The oil group said the freezing of properties approved by the French court in Paris was a “necessary preparatory step to take ownership of the properties and ensures that the proceeds of sales would be due to Cairn.”

Analysts say New Delhi’s unwillingness to honor the international arbitration award and instead continue to appeal the ruling follows a pattern of Modi government’s refusal to acknowledge any mistakes in its government. . Any payment now made to Cairn can be read as a tacit acknowledgment of the fault.

“This government is very clear (they can’t admit they made a mistake), even if it’s looking you in the face,” said Partha Mukhopadhyay, a senior member of the New Delhi Policy Research Center. of this year.

Under a law passed in 2012, India retroactively demanded $ 1.4 billion from Cairn Energy in tax payments related to the floating of the British group of its Indian subsidiary on the Bombay Stock Exchange in 2007.

In December, a Dutch arbitration tribunal found that India had breached its obligations under the UK-India Bilateral Investment Treaty in 2014, when tax officials confiscated the remaining 10 million shares. % of Cairn Energy in the subsidiary, which sold to Vedanta.

The Indian government did not respond to any requests for comment.

“Our strong preference remains a friendly and agreed deal with the government of India to close this matter,” Cairn said, adding that he had submitted “a detailed series of proposals to them since February this year.” .

“However, in the absence of this agreement, Cairn must take all necessary legal action to protect the interests of its international shareholders.”