Cairn Energy claims rights to Indian assets in Paris over tax row

·3-min read

Cairn Energy claimed it has won the rights to 20 Indian assets in central Paris worth more than 20 million euros as part of a tax dispute between the British firm and the government in New Delhi.

The Edinburgh-based firm, which has oil and gas operations in India, said it wanted to protect the interests of its shareholders.

"This is the necessary preparatory step to taking ownership of the properties and ensures that the proceeds of any sales would be due to Cairn," the oil and gas exploration company said.

In New Delhi, the government said it has not received a communication from any French tribunal and that it was trying to verify whether the courts had handed down such a ruling in favour of Cairn Energy.

“There have been news reports that Cairn Energy has seized/frozen state owned property of the government of India in Paris,” it said in a statement.

“Whenever such an order is received, appropriate legal remedies will be taken, in consultation with counsels to protect India's interests,” the finance ministry said.

Prime property

According to several media reports, the state-owned properties are located around the French capital.

The Press Trust of India, the country’s largest news service, said the assets, mostly apartments, are used by the Indian government establishment in France.

They are in the 14th arrondissement in the south of the city as well as the traditionally chic 16th arrondissement to the west

December ruling

The French court reportedly gave its ruling eight months after The Hague Court of Appeal awarded Cairn damages of more than one biliion euros over certain retrospective tax claims.

India, which says tax is a sovereign matter, challenged the ruling in March.

“Government of India will vigorously defend its case … at The Hague,” the ministry statement added.

Cairn, which says Delhi owes it 1.43 billion euros in total, started a process to seize Indian assets in May and brought a lawsuit in the US against state-run Air India.

Cairn claimed it still preferred an agreed, amicable settlement with the government of India to draw the matter to a close.

“However, in the absence of such a settlement, Cairn must take all necessary legal actions to protect the interests of its international shareholders,” it added.

Indian officials said representatives from Cairn had sought a resolution to the long-running row.

Festering legacy

The government in New Delhi inherited the tax dispute from the previous administration which was voted out of office in 2014.

The controversy erupted in 2012 when the government slapped hefty taxes retrospectively on several companies including British telecoms giant Vodafone which also took India to the courts and won.

The policy of then prime minister Manmohan Singh’s government, was seen as a stumbling road block to foreign investment in India.

Narendra Modi's administration has promised it will not resort to retrospective taxation in the future and instead make the tax regime more transparent, stable and predictable.

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