Cairn Energy Plc. has asked a US court to make Air India deposit money in a case where it seeks to seize the national carrier’s aircraft to enforce an arbitration victory against India.
The Scottish energy giant believes New Delhi may sell the airline by the time a decision is reached.
In May, Cairn filed a case against Air India as the company looked to establish that the airline is “the alter ego of the Republic of India and therefore jointly and severally liable for the debts and obligations of India itself”. This is a legal process under which a favourable order allows Cairn Energy to seize the airline’s planes and other assets.
“[P]rejudgment security is equitable because India has stated that it will indemnify Air India for any losses in this litigation. This shows in turn that Cairn is likely to prevail on the merits, as India is yet again disregarding corporate formalities and that any judgment entered against Air India would be ultimately borne by India—the original debtor in this case,” wrote Dennis H. Hranitzky, the counsel for Cairn Energy, in a letter dated September 2. Mint reviewed a copy of the letter filed in the court.
“India has broadcast to the world that neither it nor Air India will respect any judgment by this Court: an Indian official said this case did not pose ‘a major issue’ to Air India because ‘any judgement of a US court is not enforceable in India’, and at best, Cairn could ‘attach an aircraft in the US’. Air India also intends to delay these proceedings to move assets overseas, as India intends to sell Air India, expecting that the ‘case will fall through automatically’ as a result. Of course, a paper transaction will just pass along Air India’s liability to its new owners—but this shows that Air India intends only to buy time until it can develop a new strategy,” the letter said.
{{/usCountry}}“India has broadcast to the world that neither it nor Air India will respect any judgment by this Court: an Indian official said this case did not pose ‘a major issue’ to Air India because ‘any judgement of a US court is not enforceable in India’, and at best, Cairn could ‘attach an aircraft in the US’. Air India also intends to delay these proceedings to move assets overseas, as India intends to sell Air India, expecting that the ‘case will fall through automatically’ as a result. Of course, a paper transaction will just pass along Air India’s liability to its new owners—but this shows that Air India intends only to buy time until it can develop a new strategy,” the letter said.
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