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    $1.26 Billion Law Suit clouds Air-India

    Air India has time till mid-July to challenge the lawsuit filed by Britain’s Cairn Energy PLC demanding that a US federal court force the airline to pay a USD 1.26 billion arbitration award it had won against the Indian government in December last year, sources said.

    Air India is controlled by the Indian government so much that they are “alter egos”, Cairn had said in the lawsuit filed with the US District Court for the Southern District of New York. The court should hold the airline company liable for the arbitration award, the company had said.

    A three-member international arbitration tribunal that consisted of one judge appointed by India had unanimously in December overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.

    With Cairn seeking to recover the award from state-owned entities such as Air India, the government has said it will contest any enforcement.

    Air India has time till mid-July to file a plea contesting Cairn lawsuit, three sources aware of the matter said.

    The airline, which is in the process of being privatised, is likely to argue that it is a separate entity and not the alter ego of the Indian government and cannot be forced to pay for any liability of the government, they said.

    Air India spokesperson has not given any comments.

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