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Failure to Pay International Judgements Becoming Political Headache for Modi Government

Is the failure to pay international legal judgements, or in some cases, outright evasion, becoming a bigger headache for the Modi government than originally planned?

Members of the Lok Sabha, India’s lower house of Parliament, are now questioning Modi government ministers about Devas, Cairn/Vodafone amongst others.

Shri G.S. Basavaraj – a member of Modi’s ruling Bharatiya Janta Party (BJP), and Shri Rajmohan Unnithan – a member of the Indian National Congress (INC) party – questioned the government whether Air India will be seized by creditors, including Devas and Cairn asking the Minister of State in the Ministry of Civil Aviation V.K. Singh, “Whether the Government is aware of the law suits filed by Cairn Energy and Devas Multimedia seeking to recover their dues from the Indian Government through the seizure of Air India’s overseas assets?”

Singh was forced to admit that this state asset is indeed the target of asset pursuit in a foreign court.

In July, Devas filed action in the U.S. District Court for Southern District of New York seeking:

  • To declare that Air India is the alter ego of India and legally indistinct from the Indian government itself;
  • Find that Air India shall be jointly and severally liable for any judgment entered against India; and
  • Allow execution, attachment, and other orders as appropriate, including orders for injunctive relief, requiring Air India to satisfy the liability owed to Devas’s shareholders.

Shri Ajay Kumar Misra Teni and Shri G.S. Basavaraj, both members of the BJP, questioned the Minister of State in the Ministry of Finance Shri Anurag Singh Thakur. The two asked, “Whether it is true that Cairn Energy has moved to enforce the $1.2 billion award it won against India?” as well, “Whether the Cairn Energy award may adversely affect the foreign investment in India?”

The answer is a resounding ‘yes’ to both questions.

Another official that received questions about current cases against the Indian Government was the Minister of Law and Justice, Shri Ravi Shankar Prasad.

The consequences of India’s behavior are becoming clear – MPs are beginning to question the Prime Minister and his ministers, the Modi government is set to lose around 20 assets in Paris valued at more than $20 million to Cairn and there’s the possibility that Air India’s assets, – and even a plane, could be seized.

It is now becoming clear inside India that the price is going up for the Indian government’s obfuscation and evasion. Realizing the seriousness of these unpaid awards, the MPs are right to be worried, as the longer that these disputes drag on, the more confidence is eroded that India respects international laws and is a safe place for investors.

Even members of PM Modi’s own BJP are starting to become skeptical of the government’s strategy – and its integrity – in the Devas case. When your own side turns on you, it’s surely time to reassess your approach.