AAI to take legal recourse over Bengaluru-based Devas Multimedia seizing USD 30mn

Over USD 30 million, which was held by global airlines body IATA on behalf of the AAI, has been seized by Devas Multimedia's shareholders following a Canadian court order.

The Centre-run Airports Authority of India (AAI) on Tuesday said it is taking legal recourse to defend itself from a Canadian court order that has allowed Devas Multimedia's shareholders to seize an amount of over USD 30 million of the AAI held by the International Air Transport Association (IATA).

The issue was then discussed on seniormost levels in Mumbai and a proposal for a new system was sent to AAI’s headquarters in Delhi. (HT image)

In a statement, a spokesperson of the AAI said: "AAI has not been served any order by the Quebec Court, Canada in this matter. However, IATA shared certain documents on AAI's request for suspending the transfer of amount collected on behalf of AAI."

"AAI is taking legal recourse to defend itself from the impugned order," the spokesperson added.

In a statement on Monday, a spokesperson of Devas Multimedia said an amount of over USD 30 million, which was held by global airlines body IATA on behalf of the AAI, has been seized by Devas Multimedia's shareholders following a Canadian court order.

On October 27, 2020, a US court had asked Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO), to pay a compensation of USD 1.2 billion to Devas Multimedia, a Bengaluru-based startup, for cancelling a satellite deal in 2011.

"In a major update in Devas Multimedia's case -- Devas' shareholders have been granted the right to garnish property belonging to AAI held by IATA in Montreal," the company spokesperson added.

This novel enforcement strategy requires the IATA to garnish, amongst other things, the air navigation charges and the aerodrome charges held by it either at its head office in Montreal or at any of its branches worldwide, the spokesperson mentioned.

The spokesperson said: "These actions represent the first fruits of a globally focussed effort to attach assets of the Indian government to satisfy the Devas Multimedia's awards."

According to the company spokesperson, more than USD 30 million have been seized till date under the IATA action.

The IATA assists the AAI in collecting charges such as air navigation charges from foreign airlines.

According to the spokesperson of Devas Multimedia, the Canadian court found that "AAI is India, in so far as it is an organ of the State of India inseparable from India or is the alter ego of India".

"As a result, an order from this Honourable Court, recognising and declaring the treaty awards enforceable in Quebec, can be executed on AAI's assets," the court said.

Matthew D McGill, a partner at Gibson, Dunn & Crutcher, and the lead counsel for several shareholders of Devas Multimedia, said, "We will pursue the Indian government in courts worldwide to ensure the debts owed to Devas are satisfied. Our action in Canada has resulted in millions of dollars garnished by Devas shareholders and represents the first fruits of a globally-focussed effort to be paid."

According to an agreement signed in January 2005, Antrix agreed to build, launch and operate two satellites and to make available 70 MHz of S-band spectrum to Devas, which the latter planned to use to offer hybrid satellite and terrestrial communication services throughout India.

The agreement was terminated by Antrix in February 2011. In June 2011, Devas commenced arbitration proceedings under the Rules of Arbitration of the International Chamber of Commerce.

In September 2015, the arbitration tribunal asked the commercial arm of ISRO to pay USD 672 million.

In his order dated October 27, 2020, Judge Thomas S Zilly, US District Judge, Western District of Washington, Seattle, asked Antrix Corporation to pay a compensation of USD 562.5 million to Devas Multimedia Corporation and the related interest rate, amounting to a total of USD 1.2 billion.