Subsequent tax: Cairn drops lawsuit against Air India, center in USA

UK energy company Energy, renamed Capricorn Energy this week, has withdrawn arbitration from the US courts in the context of its settlement with the Indian government in the retroactive tax proceedings.

Cairn Energy filed a “notice of voluntary dismissal” of its petition against India in the District of Columbia District Court on Wednesday, according to the court records. On the same day, she filed a similar motion in New York’s Southern District Court to dismiss her motion against Air India. Both cases have been “closed” according to the PacerMonitor website, which prosecutes federal cases in the United States.

On February 12, Cairn filed a petition with the District of Columbia Court for confirmation of the award it won in retrospective tax proceedings against India last December. The arbitration tribunal had ordered India to pay the British company US $ 1.2 billion plus interest and costs in the seven-year-old tax proceedings. The company attempted to seize the Indian government’s assets overseas to reclaim the money, so the company also filed a lawsuit against Air India in the New York court on May 14. Cairn called on the court to hold Air India responsible for India’s debts, including the obligations arising from the arbitration award.

Decision after subsequent tax changes

“Pursuant to Rule 41 (a) (1) (A) (i) of the Federal Code of Civil Procedure, the plaintiff (s) and / or their legal advisers hereby notify that the above complaint will be dismissed voluntarily, without prejudice to and at no cost against the defendant (s) Air India Ltd, “says the summary of the termination notice on PacerMonitor.

Cairn changed his stance after the government abolished the retroactive tax law. The company announced on Nov. 3 that it had “entered into commitments with the Government of India” to participate in the program and would cease all arbitration enforcement proceedings.

The company expects a refund of 7,900 billion rupees. The government had confiscated Cairns’ stocks, dividends and tax refunds in order to meet its tax claim.

The dispute with Cairn began in 2014 when the government imposed a capital gains tax of Rs.10,200 billion plus interest and penalties for an asset reorganization the company undertook in 2006 in its Indian entity prior to listing its shares in 2007. Cairn Energy sold the majority stake in its Indian unit to Vedanta from billionaire Anil Agarwal in 2011.