Devas recovery suit: Air India wins nod to appeal against Canadian ruling

Air India has won a nod of an appeals court in Quebec to challenge a Canadian court order that allowed foreign investors in Bengaluru-headquartered Devas Multimedia to seize its funds to recover compensation for a failed 2005 satellite deal with Antrix Corporation, a commercial arm of ISRO.

In a February 11 ruling, Judge Christine Baudouin agreed with Air India that the court should take a closer look at the claim brought by three Mauritius investors and the German major Deutsche Telekom to identify the airline as an alternative to Government of India to facilitate recovery of compensations awarded by international tribunals over the failed satellite deal.

 

"Without expressing an opinion on the merits or on the chances of success in appeal, I am satisfied that the present matter is one that should be submitted to the court," Judge Baudouin wrote in a brief order. She set a hearing in the case for May 13.

Earlier this month, a US federal court for the southern district of New York stayed proceedings to identify Air India as an alter ego of India and to find its assets in the US to facilitate recovery of compensation awarded by international tribunals.

The shareholders - CC/Devas (Mauritius) Ltd, Devas Employees Mauritius Pvt Ltd and Telecom Devas Mauritius Ltd - have been targeting government assets abroad to recover a total of USD 1.3 billion compensation they won in three different arbitrations initiated over the nixed deal to deliver communications services throughout India.

They have got an attachment order from a French court for the Indian government's properties in upmarket Paris. On January 8, 2022, they got a ruling from a Superior Court in the Quebec region of Canada to seize 50 per cent of Air India's funds being held by the International Air Transport Authority, a Montreal-based trade association for the world's airlines that facilitates payment of air navigation charges billed to airlines and countries.

The same judgment was also cited in the New York court by the Mauritius investors to seek seizures of the carrier's assets in the US to recover compensation over the failed 2005 deal.

Air India has sought dismissal of the demand by Devas' foreign investors saying it is no longer a state-owned firm after its takeover by the Tata group on January 27, 2022.

"According to Air India Ltd... the matter raises a new issue of law, namely: whether the assets of a state-owned company with a distinct legal identity and no involvement in the original claim between the Plaintiffs (Devas shareholders) and the Republic of India, can be validly seized ex parte before judgment in hands of another third party (IATA), to pay the debt of the State itself," Judge Baudouin wrote in the order.

Separately, Deutsche Telekom filed a petition in the US District of Columbia court in April 2021 against Government of India, seeking confirmation of compensation of over USD 135 million (including interest) awarded by a Permanent Court of Arbitration in Geneva in 2020 over the annulment of a Devas-Antrix satellite deal in 2011.

This was separate from the three Mauritius investors' efforts in January 2021 to get confirmation of a USD 111 million compensation award made by the United Nations Commission on International Trade Law.

The Mauritius investors held a 37 per cent stake in Devas and Deutsche Telekom held a 20 per cent stake (in 2011) when the Indian government decided to annul the Devas-Antrix deal.

Another plea was moved before the US court for the southern district of New York to identify Air India as an alter ego of Government of India and identify its assets to recover the compensations.

Devas' investors have also separately filed pleas in the US court for the western district of Washington to identify assets of the Antrix Corp in the US to recover compensation of USD 1.2 billion awarded to Devas Multimedia as a whole by International Chamber of Commerce over the cancellation of the failed satellite deal.

The government had in February 2011 annulled a deal to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia citing alleged irregularities in allocation of spectrum and the requirement of the S-band spectrum for security purposes of the country.