Cairn Energy Plc v Air India Ltd - United States District Court Southern District of New York Case No 1-21-cv-04375 - Complaint - 14 May 2021
Cairn Energy PLC ("Cairn Energy") and Cairn UK Holdings Limited ("CUHL," and together with Cairn Energy "Plaintiffs"), by and through their undersigned attorneys, bring this action for declaratory judgment against defendant Air India, Ltd. ("Air India"), and for a money judgment against Air India, as the alter ego of the Republic of India ("India") and therefore jointly and severally liable for the debts and obligations of India itself, and allege as follows:
NATURE OF THE ACTION
1. This is an action for declaratory relief against Air India pursuant to 28 U.S.C. § 2201 and Federal Rule of Civil Procedure 57 to determine and resolve questions of actual controversy involving the relationship between India's wholly-owned national airline, Air India, and India, and in particular, whether Air India is the alter ego of India. In addition, Plaintiffs seek a money judgment adjudging that Air India is jointly and severally liable to satisfy the judgment Plaintiffs expect to be awarded against India based on a pending petition to confirm an arbitration award issued on December 21, 2020 (the "Petition to Confirm" and the "Award").
2. India's control over Air India is wide-ranging, extending throughout Air India's legal existence to its day-to-day operations and its financial affairs. India displays a dominating hand over Air India in governance matters large and small by, among other things, controlling, appointing, and having the power to remove Air India's officers and directors; determining whether, when, and from whom Air India acquires fleet equipment; dictating the airline's operational policies, from wages for its employees, to fares charged, and routes to offer; and making regular intrusive demands for information regarding operations. India entrenches these powers by making Air India dependent on grants, loans, and guarantees from India for its financial survival.
3. Under federal common law first recognized by the Supreme Court in First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983) ("Bancec"), a judgment creditor of a foreign sovereign may look to an instrumentality of the sovereign debtor for satisfaction of a judgment either when the instrumentality is "so extensively controlled by its owner that a relationship of principal and agent is created," or when giving effect to the ostensible separate legal status of the state and its instrumentality would work a "fraud or injustice." Id. at 629 (internal citations omitted).
4. Five so-called "Bancec factors" have been developed to aid courts in their analysis: (1) the level of economic control by the government; (2) whether the entity's profits go to the government; (3) the degree to which government officials manage the entity or otherwise have a hand in its daily affairs; (4) whether the government is the real beneficiary of the entity's conduct; and (5) whether adherence to separate identities would entitle the foreign state to benefits in United States courts while avoiding its obligations. Rubin v. Islamic Republic of Iran, 138 S. Ct. 816, 823 (2018). These factors are applied on a case-by-case basis rather than a "mechanical formula" for determining extensive control. Bancec, 462 U.S. at 633.
5. Here, the extensive control of Air India by India establishes that an alter ego relationship exists between them. In addition, it would give rise to fraud and result in injustice to give effect to the legal fiction that Air India and India are technically separate.