Canada court allows Devas shareholders to continue seizure of 50% of Air India’s funds

PTI, Jan 9, 2022, 8:04 PM IST

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New Delhi: A Canadian court has allowed Devas Multimedia shareholders to continue to seize 50 percent of Air India’s funds that have been held by global airlines body IATA.

The court also granted relief to the Airports Authority of India (AAI), freeing its funds that were seized by the Devas Multimedia shareholders.

Earlier this month, the court had ordered the seizure of funds of Air India and the Airports Authority of India (AAI), which have been held by the International Air Transportation Association (IATA), in a case filed by Devas Multimedia shareholders to enforce the arbitration award regarding Antrix deal’s cancellation.

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 start-up, for canceling a satellite deal in 2011.

The Canadian court’s order dated January 8, 2021, stated, ”The court finds that it is in the interest of justice to limit the scope of the Air India seizure to 50 percent of the Air India funds presently held by IATA, the whole retroactively to December 21, 2021, and that henceforth and until further order from the court, the Air India seizure shall be limited to 50 percent of the funds received and held from time to time by IATA.”

While hearing the appeal of AAI and Air India against seizure of their funds, the IATA told the Canadian court on January 3 that it held USD 17.3 million on behalf of the national carrier and USD 12.76 million on behalf of AAI as of December 31.

Freeing up AAI’s funds that were seized by Devas’ shareholders, the court said it ”shall grant the AAI application to dismiss and shall declare that the first seizure should not have been heard and granted on an ex parte basis, without first disposing of AAI’s claim to state Immunity”.

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

Similarly, the IATA keeps funds of Air India’s bookings that are done in foreign countries through global distribution systems such as Amadeus and Travelport.

In a statement on Sunday, Devas’s shareholders said they can “continue to seize Air India funds held at IATA (up to 50 percent) retrospectively and prospectively” according to the court’s latest order on Saturday.

”This is a huge win for Devas,” they said.

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.