“Arrogance” in Evading Arbitration Payments; “Problems May Have Only Just Started”
A French court last week accepted a petition from Cairn Energy that Indian state-owned assets in Paris worth over $24 million be frozen as part of the effort to pay the over $1 billion arbitration award owed to the company by the Indian Government.
The reaction of Indian media was summarized neatly by The Scroll: ““Humiliating”, the Business Standard called it. “Time to put an end to this sorry matter,” said the Indian Express. Hindu BusinessLine called it “unfortunate and embarrassing.””
India’s Business Standard writes about the government’s “arrogance” in thinking it is “above the rule of law.” The daily calls the Paris court action a “humiliating seizure” that came because “the government refused to respect adverse decisions at international arbitration.” The newspaper explains: “The government’s arrogance have led to this embarrassing situation. Arrogance, because it failed to understand that treaties freely entered into cannot simply be ignored…All the good work done by the government to reach out to investors and to improve the ease of doing business in India is undone by headlines indicating that it thinks itself above the rule of law.”
India’s Economic Times reports “As India tries to come to terms with the court order allowing Cairn Energy to seize the first batch of overseas Indian assets, problems for the government may have only just started.”
Shareholders and investors of Devas Multimedia have filed action in the U.S. District Court for Southern District of New York pursuing assets of Air India to satisfy the arbitration award owed by India to Devas’s shareholders.
The consequences start with the Devas case, as Economic Times makes clear: “[Devas] has already filed a case in US. It has asked Air India to pay the amount or forfeit its American assets like planes, cargo handling machinery and artwork. If this appeal sees a favourable ruling, it would turn out to be a double whammy for the government. Besides losing Air India’s American assets, it would also mean that the govt’s long-delayed plans for selling the flagship carrier would face an even bigger roadblock.”
The Financial Times Lex column agrees and highlights that “That is awkward for India, which hopes to privatise and list the airline”. The column highlights that $70bn of Indian assets around the world could be at risk.
Read more about Devas’ filing to pursue assets of Air India here.
Read more about a similar action against Air India filed by British firm Cairn Energy here.