Aishwarya Rathore-
Published on: August 18, 2021 11:42 IST
The Indian Government has asked a Federal Court in Washington to dismiss Britain’s Cairn Energy suit seeking execution of a USD 1.2 billion arbitral award, claiming that it had sovereign immunity under US law.
Cairn had asked a Federal Court in the United States in May to compel Air India to pay arbitration award it had won in December.
The Indian Government filed a ‘Motion to Dismiss’ petition in the US District Court for the District of Colombia on August 13, claiming it lacked subject matter jurisdiction in the dispute between Cairn and the Indian Tax Authority.
This comes only a week after the Government passed legislation to repeal a tax law that allowed the tax department to go back 50 years and levy capital gains taxes on any business assets that had changed hands outside of India.
Cairn challenged the tax demand before an International Arbitration Tribunal, which overturned the same in December last year and ordered the Government to return the money collected.
It argued in front of a US court that Air India is so closely controlled by the Indian Government that they are “alter egos” and that the Airline should be held liable for the Arbitration award.
In response, the Government filed a dismissal motion last week, citing US Foreign Sovereign Immunities Act of 1976 as a shield.
The filing states, “India also never “clearly and unmistakably” excluded Judicial Review or delegated exclusive competence to decide these questions to an Arbitral Tribunal, implying that Cairn couldn’t satisfy any exception to Sovereign Immunity under the US law.”
The Government challenged the awards in Singapore Court in the case of Vodafone and The Hague in the case of Cairn.
Also Read- Cairn Energy sues Air India in US Court to enforce Arbitration award