Devas granted right to garnish property belonging to AAI held by IATA

- Charvi

Date: 04 January 2022

A Canadian court has authorised the seizure of assets belonging to the Airport Authority of
India (AAI) held with the International Air Transport Association (IATA) in the Quebec
province and internationally. Devas shareholders on Monday said that they had seized more
than $30 million worth of AAI’s money held by the IATA following the court’s order. They
added that “additional actions are forthcoming”.

Timeline

 The dispute is rooted in an agreement signed in January 2005, under which Antrix,
ISRO’s commercial arm, agreed to build, launch and operate GSAT-6 and GSAT-6A
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.
 In February 2011, following a leaked draft CAG audit report, pointing to a number of
potential irregularities in the deal, the UPA government terminated the agreement by
citing “force majeure". However, no evidence of bribery was found.
 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 an order dated October 27, 2020, 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, amounting to a total
of USD 1.2 billion.
 In October 2020, Devas also secured an arbitration award of $111 million-plus
interest, as compensation for the expropriation of 40% of interests in the
satellite/terrestrial communications business owned by it, from United Nations
Commission on International Trade Law.
 Last year, the National Company Law Tribunal ordered the liquidation of Devas
Multimedia on a petition filed by Antrix, and an appeal is currently pending in the
Supreme Court even as its overseas shareholders pursue the matter in global forums.
 A Canadian court in Montreal, held “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”. It passed separate
orders on 24 November and 21 December on pleas by shareholders of Devas
Multimedia Pvt. Ltd to enforce arbitration award of $111 million-plus interest, against
the Indian government. The court has authorised the seizure of assets belonging to
AAI held with the IATA in the Quebec province and internationally.
 IATA assists airlines and air navigation service providers in collecting monies due
from ticket sales and route navigation charges. Its billing and settlement plan (BSP)
mechanism acts as a payment gateway for travel agents around the world. After the
order on 21 December, Air India removed its inventory from global distribution
systems (GDS), used by travel agents to issue tickets. Last Wednesday Air India again
put up its ticket inventory on GDS platforms but only with approved credit cards.
Payments through credit card are paid to the airline by bank or the credit card
 company. Though IATA keeps record of credit card sales it is not involved in the
collection and remittance process.
 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).
 On the intervention of AAI’s counsel in Canada, Commercial Division of the Quebec
Superior Court accepted to designate a judge on an urgent basis to hear the
applications to quash and stay the seizures/garnishing. The hearing will take place
today i.e. on January 4, at 9.30.

Meanwhile, Tata group, which will take over Air India this month, has been granted
indemnity from past legal claims in its shareholder agreement with the government.

Matthew D. McGill, partner at law firm Gibson, Dunn & Crutcher LLP, and lead counsel for
several Devas’ shareholders, 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 focused effort to be paid.”

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.