New Delhi: Air India has asked a New York court to dismiss a petition filed by Britain’s Cairn Energy for seizure of its assets to enforce $1.2 billion arbitral awards against the Indian government, saying the litigation was premature as an appeal against the arbitration award was still pending.
The petition by the airline, which is separate to Indian government’s plea in a Washington court seeking dismissal of Cairn’s lawsuit to seek confirmation of the arbitral award, said the New York district court lacks jurisdiction to adjudicate a “mere hypothetical question” or one that depends upon contingent future events that may or may not occur.
Cairn first moved a court in the US District Court for the District of Columbia seeking confirmation of the arbitration award and then filed a petition in the New York court to seek declaration of Air India as “alter ego” of the Indian government and so it should be made liable to pay the $1.26 billion arbitral award.
Dispute and arbitration
An international arbitration tribunal in December last year set aside the levy of capital gains tax, using a 2012 retrospective legislation, on a 2006 reorganization of India business that Cairn carried before listing it on local stock exchanges. It ordered India to return the value of shares seized and sold, dividend confiscated and tax refund withheld to enforce levy.
With India refusing to pay, Cairn moved courts in the US.
“Cairn’s petition to confirm the Award is pending in the District Court for the District of Columbia,” Air India said in the August 23 petition seen by PTI.
It went on to state that the Indian government has filed before a court in The Hague - the seat of the international arbitration tribunal - a Motion to Stay and a Motion to Dismiss the arbitral award.
Air India’s stand
Award is not subject to enforcement under the New York Convention,” said Air India. “Such an attempt is improper, and the Complaint should be dismissed.”
It sought dismissal on three counts
- first because the court lacks jurisdiction “to issue a declaratory judgment because the alleged controversy is not ripe”;
- second “Air India is immune from suit because none of the exceptions to sovereign immunity under the Foreign Sovereign Immunities Act (FSIA) applies to a premature collection proceeding of a hypothetical judgment;
- third “the complaint, which presupposes an enforceable judgment that does not exist, fails to allege a cognizable cause of action
The Indian government had earlier this month asked the US District Court for the District of Columbia (DDC) to dismiss the case, arguing that it lacks jurisdiction since the country never agreed to arbitrate tax disputes. Meanwhile, litigation filed by New Delhi in the Netherlands to have the award set aside also remains pending.
“Cairn asks this court to issue a declaration that Air India, as alleged alter ego of [India], will be liable on a judgment that does not, and may never, exist,” the airline said in the August 23 petition.
“Unless and until the court in the Cairn confirmation action determines the threshold question of the enforceability of the award against (India), whether Cairn can then enforce that judgment against Air India under an alter ego theory is purely academic and not ripe for adjudication.”