Air India (AI, Delhi International) has until mid-July to challenge a lawsuit filed by British oil and gas exploration and development firm Cairn Energy, which has sued the flag carrier in a US court over a USD1.26 billion arbitration award it won against the Indian government six months ago.
Heavily indebted Air India has another three weeks to file a plea contesting the lawsuit, three sources with knowledge of the matter told the Business Standard newspaper.
Earlier this year, the carrier became embroiled in a long-running corporate tax dispute between Cairn Energy and the Indian government over the award, as the Edinburgh-based company threatened to seize state assets if India refused to pay.
The award for damages, in a case dating back to 2014 when income tax officials seized the company’s 10% stake in Cairn India following a corporate reorganisation, was ordered in a December 2020 ruling at the Permanent Court of Arbitration in The Hague.
According to reports, Cairn Energy has been identifying and tracking potential Indian state assets it could seize if India does not comply, including aircraft, ships, and real estate.
Air India is government-controlled - so much so that the state and the airline are “alter egos” as Cairn argued in its lawsuit filed with the United States District Court for the Southern District of New York. But the airline, which is in the process of being privatised, is likely to respond that it is a separate entity distinct from the government, the sources said.
Cairn Energy may also turn to the courts in Singapore in its efforts to enforce a seizure of assets. Once a court recognises Air India as an alter ego of the Indian government, Cairn can press ahead with an attempt to capture assets in that country, also including immovable assets and bank accounts.
Air India did not immediately respond to ch-aviation’s request for comment.
