Cairn Energy said it had effectively seized Indian state-owned properties in Paris, in a dramatic escalation of the fight between the Scottish oil producer and the government of Narendra Modi.
The action by Cairn is the latest attempt to force India to pay $1.7bn awarded by an international tribunal over a tax dispute.
Cairn, which has a market capitalisation of just £752m and only 180 employees, was awarded the sum last year following a long-running arbitration.
It says it has identified $70bn of assets around the world ranging from buildings to Air India aircraft that it may try to seize as long as the Modi government refuses to pay.
Its asset freeze application in Paris is the first to succeed. The company said it would effectively transfer the ownership of 20 properties valued at more than €20m, including in the 16th and 14th arrondissements. Official documents seen by the Financial Times confirmed the French court had authorised the freeze.
The strategy is similar to that of US hedge fund Elliott Capital Management, which in 2012 seized an Argentine naval vessel in Ghana over a debt dispute. Cairn has even hired lawyer Dennis Hranitz, who worked on the Elliott dispute.
Cairn, which is based in Edinburgh and listed in London, has pushed for UK government support to help with its claim, but has grown frustrated at the slow progress and the refusal of the Modi government to pay up. The UK government has aggressively pursued a post-Brexit trade deal with India.
The oil group said the freeze on the properties approved by the French Court, Tribunal Judiciaire de Paris, was a “necessary preparatory step to taking ownership of the properties and ensures that the proceeds of any sales would be due to Cairn”.
Analysts say New Delhi’s unwillingness to honour the international arbitration award and to instead continue to appeal against the judgment in court follows a pattern of the Modi government’s refusal to acknowledge any errors in its governance. Any payout made now to Cairn could be read as a tacit acknowledgment of wrongdoing.
“This government is quite clear — they cannot admit they made a mistake — even if it is staring you in the face,” said Partha Mukhopadhyay, a senior fellow at New Delhi’s Centre for Policy Research, earlier this year.
Under a law passed in 2012, India retroactively demanded $1.4bn in tax payments from Cairn Energy related to the UK group’s flotation of its Indian subsidiary on the Bombay Stock Exchange in 2007.
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In December a Dutch arbitration tribunal found India had violated its obligations under the UK-India Bilateral Investment Treaty in 2014 when tax officials seized Cairn Energy’s residual 10 per cent stake in the subsidiary, which it sold to Vedanta.
The Indian government did not respond to a request for comment.
“Our strong preference remains an agreed, amicable settlement with the government of India to draw this matter to a close,” Cairn said, adding it had submitted “a detailed series of proposals to them since February this year”.
“However, in the absence of such a settlement, Cairn must take all necessary legal actions to protect the interests of its international shareholders.”