Air India has been sued by Cairn Energy in a lawsuit that is not even remotely connected to the airline’s operations. The airline would never have imagined that it will get caught up in a legal battle between Cairn Energy and the Indian government.
In December last year, Cairn Energy PLC won a tax arbitration dispute against the Indian Government. The court ordered the Indian Government to pay $1.2 billion, interest costs included. In March this year, the people of India rejected the verdict by the US court and challenged it in the International Court of Justice, The Hague.
However Cairn Energy, in order to put pressure on the Indian Government, filed a new lawsuit in a US District Court on May 15, 2021, making Air India liable to pay the money. The lawsuit argues that a national carrier is a state-owned company; it is “legally indistinct from the state itself.”
The nominal distinction between India and Air India is illusory and serves only to aid India in improperly shielding its assets from creditors like (Cairn),”the filing said.
What Lies Ahead for Air India
Air India has not yet issued any statement on this controversy as it has not yet received any formal notice.
As and when any such notice is received. The government or concerned organization shall take all necessary steps to defend against any such illegal enforcement action,” an airline spokesperson said.
As Air India is under dis-investment and the government is in the midst of the financial bidding process. A lawsuit like this can put the whole process in jeopardy.
On the other hand, Cairn is only using this to put pressure on the Indian Government. The lawsuit by itself may not hold as Air India is a registered company with shareholder ownership, a majority of which lies with the Indian government. The airline is not a government department under the Ministry of Civil Aviation. However, should Cairn energy win the lawsuit, the company could potentially seize Air India aircraft for flying outside the Indian territory.
What do you feel about the more significant issue of national Airlines being made responsible for the acts of their government that are unconnected with their operations? Do let us know in the comments section below.