Cairn Energy a Scotland-based firm has registered a suit in the US Court against Air India to impose a $1.2 billion tax arbitration award which it won against India, to which the Indian government responded that they will fight strongly.

According to a company spokesperson, Cairn is exercising the required legal steps to protect shareholders’ interests in the absence of a resolution to the arbitral award. Further adding that the company continues to be open to continuing constructive dialogue with the Indian Government to arrive at an adequate outcome to this long-running issue. Cairn’s move is being perceived as a pressure tactic on the Indian Government after December's Hague-based International Arbitrational Tribunal ruled in the company’s favor. As talks between the company and the Government did not produce any results, the company began identifying overseas Indian assets in case the Indian government fails to honor the arbitration award. The latest lawsuit against Air India is an important legal move in this direction. Meanwhile, as per the government sources, there are some news reports in the media stating that Cairn has initiated action against a PSU to enforce the award. According to them the Government/ PSU has not received any such notice, and when any such notice is received, then all necessary steps shall be taken to defend against any such illegal enforcement action. A different source mentioned that the government has challenged the award in the case of Cairns in an appropriate court in the Hague and is confident that the award shall be set aside, also the Government has engaged a counsel team that is ready to defend against any enforcement action if and when initiated by Cairn anywhere in the world.

As per the reports, Cairn filed the lawsuit on Friday in the U.S. District Court for the Southern District of New York, attempting to make Air India accountable for the judgment that was awarded to Cairn. The lawsuit asserted that the carrier as a state-owned company is legally indistinct from the state itself. According to the filing, the nominal distinction between India and Air India is illusory and serves only to aid India in inadequately protecting its assets from creditors like Cairn. Previously this year, Cairn moved courts in the US, the UK, the Netherlands, Canada, France, Singapore, Japan, the UAE, and the Cayman Islands to get the December 21 international arbitration tribunal award registered and recognized, making it the first step before it can seek seizure of the Indian government assets such as bank accounts, payments to state-owned entities, aircraft, and ships in those jurisdictions, in case India does not return the value of the shares seized and sold, dividend confiscated, and tax refund stopped to adjust a ₹10,247-crore tax demand.