The Hindu | 9 January 2022
Devas can seize only 50% of Air India’s assets, says Canada court
by Jagriti Chandra
In partial relief for India, a court in Canada has said that investors of Devas Multimedia can seize only 50% of Air India’s (AI) assets held by the International Air Transport Association (IATA). It has also quashed the order permitting seizure of funds belonging to the Airports Authority of India (AAI).
Earlier, in two separate orders on November 24 and December 21, Devas shareholders had received permission from the Quebec Superior Court to seize assets of AAI and AI held by IATA in connection with the two arbitration awards it won for wrongful cancellation of its deal with ISRO’s arm, Antrix, in 2011. Subsequently, Devas shareholders moved to freeze $30 million belonging to the two entities, including $17.3 million of ticketing fees collected on behalf of AI.
Both AI and AAI then moved the court seeking quashing of its orders.
On January 8, the Quebec Superior Court rejected Air India’s plea for quashing, but amended its earlier order and reduced seizure amounts to 50% of the funds held by IATA retrospectively and prospectively. The relief for Air India came after it argued that the airline’s operation would be put in jeopardy especially given global interruptions to the airline industry due to the COVID-19 pandemic.
However, the court granted AAI its motion to quash the November 24 order after it said that it was an entity of the Indian state, enjoyed state immunity and that navigational charges and aerodrome charges collected by IATA on behalf of AAI were related to sovereign functions and not commercial functions.
Queries sent to the Ministry of Civil Aviation and Air India on the future course of action remained unanswered till the time of going to print.
“Without going into detail into the extensive factual allegations aiming to establish India’s wrongful and abusive conduct towards Plaintiffs, the many actions, direct or indirect, of India within its country’s boundaries to attack, inter alia, the Treaty Awards and to prevent their execution by Plaintiffs is simply mind-boggling to say the very least," the court observed.
The setback for Air India comes weeks before it is to be handed over to Tata Sons as part of the airline’s privatisation, though the new buyers enjoy indemnity from past legal claims.
The three Devas shareholders (Devas Mauritius Ltd, Devas Employees Mauritius Private Limited and Telcom Devas Mauritius Limited), who moved the Canada court, have won two international arbitration awards for wrongful termination of its deal with Antrix — $563.5 million from the International Chamber of Commerce in September 2015 and $111 million from the Permanent Court of Arbitration (PCA) in October, 2020. It is the PCA award that the shareholders are seeking to enforce through their actions in Canada.