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Air India asks US court docket to dismiss Cairn petition, says it’s untimely

NEW DELHI: Air India has requested a New York court docket to dismiss a petition filed by Britain’s Cairn Vitality for seizure of its belongings to implement USD 1.2 billion arbitral awards towards the Indian authorities, saying the litigation was untimely as an enchantment towards the arbitration award was nonetheless pending.
The petition by the airline, which is separate to Indian authorities’s plea in a Washington court docket in search of dismissal of Cairn’s lawsuit to hunt affirmation of the arbitral award, mentioned the New York district court docket lacks jurisdiction to adjudicate a “mere hypothetical query” or one which relies upon upon contingent future occasions which will or might not happen.
Cairn first moved a court docket within the US District Courtroom for the District of Columbia in search of affirmation of the arbitration award after which filed a petition within the New York court docket to hunt declaration of Air India as “alter ego” of the Indian authorities and so it ought to be made liable to pay the USD 1.26 billion arbitral award.
A global arbitration tribunal in December final yr put aside the levy of capital beneficial properties tax, utilizing a 2012 retrospective laws, on a 2006 reorganization of India enterprise that Cairn carried earlier than itemizing it on native inventory exchanges. It ordered India to return the worth of shares seized and bought, dividend confiscated and tax refund withheld to implement levy.
With India refusing to pay, Cairn moved courts within the US.
“Cairn’s petition to substantiate the Award is pending within the District Courtroom for the District of Columbia,” Air India mentioned within the August 23 petition seen by PTI.
It went on to state that the Indian authorities has filed earlier than a court docket in The Hague — the seat of the worldwide arbitration tribunal — a Movement to Keep and a Movement to Dismiss the arbitral award.
“In impact, the Grievance (by Cairn Vitality) is a untimely enforcement motion dressed up as a declaratory judgment motion, invoking this Courtroom’s federal jurisdiction to get a head begin on executing the Award earlier than the D.D.C. has had the chance to deal with the Republic of India’s immunity defenses and its claims that the Award just isn’t topic to enforcement below the New York Conference,” Air India mentioned.
“Such an try is improper, and the Grievance ought to be dismissed.”
It sought dismissal on three counts – first as a result of the court docket lacks jurisdiction “to concern a declaratory judgment as a result of the alleged controversy just isn’t ripe”, second “Air India is immune from go well with as a result of not one of the exceptions to sovereign immunity below the International Sovereign Immunities Act (FSIA) applies to a untimely assortment continuing of a hypothetical judgment, and third “the Grievance, which presupposes an enforceable judgment that doesn’t exist, fails to allege a cognizable explanation for motion.”
The Indian authorities had earlier this month requested the US District Courtroom for the District of Columbia (DDC) to dismiss the case, arguing that it lacks jurisdiction for the reason that nation by no means agreed to arbitrate tax disputes. In the meantime, litigation filed by New Delhi within the Netherlands to have the award put aside additionally stays pending.
“Cairn asks this court docket to concern a declaration that Air India, as alleged alter ego of [India], might be liable on a judgment that doesn’t, and will by no means, exist,” the airline mentioned within the August 23 petition.
“Except and till the court docket within the Cairn affirmation motion determines the edge query of the enforceability of the award towards (India), whether or not Cairn can then implement that judgment towards Air India below an alter ego idea is solely tutorial and never ripe for adjudication.”
This comes inside weeks of the federal government enacting a laws to scrap the tax rule that gave the tax division energy to go 50 years again and slap capital beneficial properties levies wherever possession had modified fingers abroad, however enterprise belongings had been in India. That rule had been used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities, together with Rs 10,247 crore on Cairn.
The Indian authorities and Air India are defending their positions as guidelines for withdrawal of such tax calls for are within the strategy of being framed.
“One of many necessities for the dropping of the retrospective tax calls for is that the events involved have to provide an enterprise for withdrawal of all instances towards the federal government/tax division. So, whereas all that is in course of, the federal government is obligated to reply in any authorized matter the place there’s a time bar for doing so,” an official defined.
The federal government within the dismissal movement filed on August 13 earlier than DCC, cited protections afforded by the US International Sovereign Immunities Act of 1976.
India within the submitting mentioned the court docket “lacks subject-matter jurisdiction below the FSIA as a result of India by no means waived its sovereign immunity and, likewise, by no means supplied – not to mention agreed – to arbitrate the current dispute with Petitioners”.
“India additionally by no means “clearly and unmistakably” excluded judicial overview or delegated unique competence to determine these inquiries to an arbitral tribunal”, implying that Cairn could not fulfill any exception to sovereign immunity below the US regulation, the submitting mentioned.

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