As the Indian government awaits final bids for Air India (AI, Delhi International) by a deadline of September 15, it is preparing to absolve bidders of any liabilities arising out of potential attempts by Cairn Energy to seize the flag carrier's property in compensation for the UK energy firm's long-running dispute with the country, sources told Bloomberg News.
The government will offer protection to the bidders through an indemnity clause in a further step to ensure a privatisation deal finally succeeds, the anonymous close to the matter said. Local media have identified the bidders as conglomerate Tata Sons and Ajay Singh, majority owner of low-cost carrier SpiceJet.
Officials cleared a final sale purchase agreement on August 28, a plan that government ministers are likely to approve this week. However, the Finance Ministry has declined to comment on the Bloomberg report.
Cairn Energy’s legal altercation with New Delhi is over the enforcement of a USD1.26 billion arbitration award in a December 2020 ruling at the Permanent Court of Arbitration in The Hague settling a dispute dating back to 2014. In May, it sued Air India claiming that the state-owned airline is an alter ego of the country itself and jointly liable for the debt. According to reports, Cairn has been identifying assets it could seize, including state-operated aircraft, if the government fails to comply.
Shareholders in Bangalore-based tech firm Devas Multimedia Pvt Ltd are also looking for ways to seize Air India assets abroad in order to obtain more than USD1.2 billion the company won from the Indian government in international arbitration. Tata Sons has already reportedly asked the government for an indemnity clause to the privatisation deal to protect itself from unexpected claims, according to the Economic Times.
