Friday, July 9 2021

Dive In

The Ministry of Tourism and Wildlife has noted with concern an article published in the Daily Mail, UK, stating that a herd of 13 Elephants will be relocated from Kent Wildlife Park in the UK to Kenya in what is referred to as a “wild first rewilding project” by the publication. The Ministry wants to state that neither them nor the Kenya Wildlife Service (KWS) have been contacted or consulted on this matter. Relocation and rehabilitation of an animal from a zoo is not easy and is an expensive affair.

That is the Kenyan government’s response to a widely publicised project of a charity—founded by PM Boris Johnson’s wife, Carrie. It is supposed to be the world’s first such initiative. And it has entailed months of organising, including purchasing purpose-made crates to transport the elephants. The only small omission: Someone forgot to tell the Kenyan government.

Big Story

A shocking seizure of India’s assets

The TLDR: A French court froze 20 residential properties worth over €20 million ($24 million) belonging to the Indian government in Paris. The reason: The government owes a Scottish company Cairn Energy $1.7 billion in a tax dispute—and hasn’t yet paid up. The company is now targeting Indian assets around the world—including those owned by Air India. 


What is this tax dispute?

  • Cairn Energy is an Edinburgh-based oil and gas exploration company—which began its operations in the country over two decades ago.
  • In 2006, Cairn Energy consolidated its Indian assets under a holding company called Cairn India Limited—and it transferred its entire share capital to Cairn India.
  • Cairn India then went public on the Indian stock exchange—and divested 30% of its shares.
  • In 2011, Cairn Energy sold most of its holding in the Indian unit to Vedanta Resources for $8.7 billion. 
  • But tax authorities barred the transfer of a residual stake of 9.8% and froze all dividend payments from Cairn India to Cairn Energy.
  • In 2012, the government rewrote the tax code and gave itself the power to go after merger and acquisition (M&A) deals all the way back to 1962.
  • And in 2014, it turned around and slapped a $3.88 billion (Rs. 29,047 crore) capital gains tax bill on Cairn Energy for gains made due the Cairn India IPO back in 2006/2007.
  • Cairn Energy disputed the retrospective application of the new tax laws. But the government seized the remaining 9.8% stake in Cairn India, valued at around $1 billion, in pursuit of back taxes.
  • Having no luck in Indian courts, Cairn Energy sought international arbitration under the India-UK treaty.
  • In December 2020, the Permanent Court of Arbitration (PCA) at The Hague sided with Cairn—and said the retrospective application of the Indian tax laws was “in breach of the guarantee of fair and equitable treatment,” and against the India-UK bilateral treaty.
  • And it awarded Cairn Energy $1.2 billion (roughly Rs 9000 crore) in compensation—which is lower than the $ 5.6 billion it asked for back in 2016.


And the government isn’t paying up?

The government has appealed the Hague verdict on the grounds that it has the sovereign right to tax any entity operating within its borders—and that right is not subject to any bilateral treaty. And in April it refused Cairn’s offer to invest the entire $1.2 billion award plus $500 million in interest in India. The government’s counter-offer asks Cairn to come to the table under the Indian tax dispute scheme ‘Vivad se Vishwas’. It will reduce the amount owed to $682.5 million (Rs 5100 crore), waive all interest and penalties, and return 1.8% of the seized shares in Cairn India.


And now Cairn is seizing the government’s assets?

The company has already filed lawsuits in the US, the UK, Canada, Singapore, Mauritius and the Netherlands in an attempt to grab the Indian government assets. France is the first country where it has been successful in pressing its claims. In May, it filed a case in New York arguing that it should be able to seize the assets of Air India. Reason: The airline 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).”


Also this:


“The award is enforceable against India-owned assets in the more than 160  countries that have signed and ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Funds of Indian public sector undertakings (PSUs) in foreign banks can be frozen. Properties or assets owned by Indian state-owned banks or PSUs can also be seized.”


Point to note: As a BBC News analyst explains:


“Cairn does not have any particular interest in trying to seize and resell Air India aircraft or the clutch of properties it has seized in France. What it wants is to be a thorn in the Indian government's side. The legal actions will, Cairn hopes, push India into a negotiated settlement—to avoid further court battles and another wave of bad publicity.”


And will Cairn win these cases?



In today’s edition

Headlines That Matter 

  • Scientists debunk lab leak theory
  • Afghan Women march with guns
  • The enormous toll of the American heatwave
  • Is your dog a genius?


Weekend Advisory

  • Is marrying your cousin as bad for your kids as everyone claims?
  • Do you know who ‘autosexuals’ are?

Share your love!

Sign up your friends & fam (and anyone else!) by copy/pasting your special referral link below! Or just click on the link and share that specially coded subscription page the usual way. We will say a big 'thank you' by offering you a very nice token of our appreciation. Check out our FAQs. to know more. We grow and thrive because of you!


Become a subscriber!

Discover why smart, curious people around the world swear by splainer!

Sign Up Here!

Gift splainer today!

Love spending your mornings with us? Share the joy by gifting a subscription to someone you ❤️

Gift splainer

Complaints, suggestions or just wanna say hi? Talk to us at talktous@splainer.in

Join our community

© 2020 splainer.in
You are receiving this email because you opted in via our website.
Unsubscribe from this list.