New York court pauses tax suit, allows Cairn Energy to settle dispute with India

A New York court has paused Cairn Energy's pursuit of US assets of Air India for the recovery of $1.2 billion arbitral award to allow the British firm to reach a settlement with the Indian government on the long drawn dispute.

The New York district court delayed the tax suit to November 18, according to court documents.

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This follows Cairn Energy and Air India jointly asking the court to stay further proceedings in view of the Indian government enacting a fresh law to scrap retrospective taxation in the country.

Cairn had on May 14 brought a lawsuit in the New York district court to hold Air India liable on behalf of the Republic of India for the obligations the government owes under a foreign arbitral award.

Seeking to repair India's damaged reputation as an investment destination, the government last month enacted new legislation to drop Rs 1.1 lakh crore in outstanding claims against multinationals such as telecom group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn.