InvestorQ : How does Cairn claim that it can attach Indian assets abroad? Is it possible for Cairn to attach Indian government assets?
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How does Cairn claim that it can attach Indian assets abroad? Is it possible for Cairn to attach Indian government assets?

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Sam Eswaran answered.
1 month ago
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Firstly, let me tell you that it is perfectly possible, although there are a number of legal and diplomatic factors to consider before they can just go ahead and attach any Indian assets in any country. But to you question of whether it is possible, the answer is that it is technically and legally possible to attach assets of the government. Cairn Energy has also identified Indian sovereign assets in key countries.

In fact, Cairn has stated under pressure from its institutional investors, that it had also identified assets it can seize if the Indian government fails to return $1.7 billion as per the order of the arbitration tribunal. It may be recollected that just a couple of weeks back, the courts in the US, Netherlands, France and UK had ratified the arbitral order. This gives Cairn the legal sanction to attach Indian sovereign assets located in these countries.

The tribunal ruled that India had breached the Indo-UK bilateral treaty and asked India to immediately return $1.7 billion to Cairn. In the case of Cairn India, the actual tax bill sent by India was higher but it had managed to recover nearly $1.2 billion by withholding the dividends payable by Vedanta to Cairn PLC, the dividends payable and had also frozen and sold the shares of Vedanta belonging to Cairn PLC. Now the award asks this to be returned.

While attachment is technically possible, it is normally used only as a last resort. It me be remembered that such attachment will also have diplomatic implications and also will impact the long-term business interests of the UK in India. That is why companies normally prefer to also run track-2 negotiations simultaneously in such cases. Currently, Cairn is also pursuing track-2 talks with India. Indian government plans to challenge the ruling.

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