According to a US court filing, Cairn Energy has sued India's flagship carrier Air India to enforce a $1.2 billion (£850 million) arbitration award it received in a tax dispute with India.
The decision adds to the pressure on India's government to pay the $1.2 billion-plus interest and costs that an arbitration tribunal awarded the FTSE 250 company in December.
The body ruled that India had broken an investment deal with the United Kingdom and that New Delhi was responsible for paying the independent oil and gas company.
According to Reuters, Cairn filed the complaint in the US District Court for the Southern District of New York yesterday in an attempt to hold Air India responsible for the judgment that was awarded to him.
It said that, as a state-owned corporation, the carrier is "legally indistinguishable from the state itself."
The filing stated that “the nominal distinction between India and Air India is illusory and serves only to assist India in inappropriately shielding its assets from creditors like (Cairn).”
Air India did not respond to requests for comment right away.
Cairn's decision could jeopardize India's plans to sell the state-owned carrier this year. After moving to privatize the loss-making entity, New Delhi announced in December that it had received several expressions of interest.
New Delhi has filed an appeal against the arbitration award, according to the senior government official, and “the government is assured that the award will be set aside.”
Cairn, on the other hand, had begun taking measures in January to recognize Indian properties abroad against which the award could be enforced, including bank accounts, aircraft, and even ships.
It had also begun filing suit against India in courts in the United States, the United Kingdom, the Netherlands, and Canada.
According to Reuters, India has instructed state-run banks to withdraw funds from foreign currency accounts, fearing that Cairn will sue to seize the funds.
Cairn had previously stated that it was working for a settlement with India, but that it was also setting the groundwork to seize Indian assets if talks fell through.
