New York Convention

Cairn files case in U.S. to push India to pay $1.2 bn award

Cairn Energy has filed a case in a U.S. district court to enforce a $1.2 billion arbitration award it won in a tax dispute against India, a court document showed, ratcheting up pressure on the government to pay its dues. In December, an arbitration body awarded the British firm damages of more than $1.2 billion plus interest and costs.

The tribunal ruled India breached an investment treaty with Britain and said New Delhi was liable to pay. Cairn asked the U.S. court to recognise and confirm the award, including payments due since 2014 and interest compounded semi-annually, according to the Feb. 12 filing seen by Reuters.

The case marked a first step in Cairn’s efforts towards recovering its dues, potentially by seizing Indian assets, if the government did not pay, a source with knowledge of the arbitration case told Reuters. “If Cairn wins the case, it will be a step towards attaching and seizing Indian assets overseas, especially in the U.S.,”. Reuters reported last month that Cairn was identifying India’s overseas assets, including bank accounts and even Air India planes or Indian ships, that could be seized in the absence of a settlement.

Cairn aims to enforce the award under international arbitration rules, commonly called the New York Convention, and recover losses caused by India’s “unfair and inequitable treatment of their investments”, the court filing showed.

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Objectives of New York Convention:

Recognizing the growing importance of international arbitration as a means of settling international commercial disputes, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention) seeks to provide common legislative standards for the recognition of arbitration agreements and court recognition and enforcement of foreign and non-domestic arbitral awards.
The term “non-domestic” appears to embrace awards which, although made in the state of enforcement, are treated as “foreign” under its law because of some foreign element in the proceedings, e.g. another State’s procedural laws are applied.
The Convention’s principal aim is that foreign and non-domestic arbitral awards will not be discriminated against and it obliges Parties to ensure such awards are recognized and generally capable of enforcement in their jurisdiction in the same way as domestic awards.
An ancillary aim of the Convention is to require courts of Parties to give full effect to arbitration agreements by requiring courts to deny the parties access to court in contravention of their agreement to refer the matter to an arbitral tribunal.