A Canadian court has authorised the seizure of assets belonging to the Airport Authority of India and Air India held with the International Air Transport Association (IATA) in the Quebec province and internationally, in a key victory for the shareholders of satellite maker Devas Multimedia in its decade-long legal battle with India.
Two separate orders passed by the Superior Court of Quebec on November 24 and December 21 show that assets of the Indian airport operator worth around $6.8 million held by the IATA have been seized. The value of the confiscated Air India assets wasn’t immediately available, but representatives of the shareholders said they have seized more than $30 million in India-owned assets to date under the orders of the Canadian court.
ET has seen copies of the orders.
Bengaluru-based Devas has won several arbitral awards, including a $1.3 billion (including interest and chargers) order at the International Chamber of Commerce’s court of arbitration over a 2011 cancelled satellite deal with Antrix Corp, the commercial arm of the Indian Space Research Agency. Its overseas shareholders approached courts in the US, Canada and elsewhere, accusing India of failing to honour the arbitral awards and seeking to capture the country’s assets abroad. They also hired former Elliott Management executive Jay Newman to help collect the arbitral awards.
“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,” said Matthew D McGill, partner at Gibson, Dunn & Crutcher, and the lead counsel for several of the shareholders. “Our enforcement in Canada reaffirms the fundamental legal principle accepted around the world that deadbeat debtors must pay what they owe,” McGill said in a statement on Monday.
The IATA is an association of airlines that, apart from setting global standards for aviation, also helps airlines collect money from ticket sales and regional navigation charges.
The latest action is with regard to a ‘Quantum Award’ issued by the Permanent Court of Arbitration in October 2020, which awarded Devas’ shareholders $111 million plus interest and costs as compensation for the expropriation of 40% of their interests in the satellite business owned by Devas.
An Air India executive, when contacted by ET, declined to comment, while calls to an Airport Authority of India official remained unanswered. Mails sent to the national carrier, the Airports Authority of India, and the ministries of civil aviation and law and justice remained unanswered at press time Monday.
The development comes at a time when the government’s deal to sell Air India to the Tata Group is in its final stages. Citing Tata Group insiders, ET reported on November 21 that the Air India deal had adequate protections, including an indemnity clause, in place to shield the group from such claims. “It does not concern the acquirer in any case. Our interests have been safeguarded,” an executive had told ET.
Newman, the adviser to Devas’ shareholders, said the development in Canada was just a start. “Additional actions are forthcoming that will underscore that India is an unsafe place to invest. No foreign investor should invest in a country where the government can ignore its contractual obligations and deploy its law enforcement agencies to harass and intimidate investors,” he said.
Newman, 69, who came out of retirement to pursue the case, told ET in an earlier interaction that he was “disturbed” by the Indian government’s use of its agencies and even courts to liquidate Devas and launch criminal investigations against its employees, instead of upholding several global arbitration orders and paying up what it owes.
According to reports, Air India had removed its ticket inventory from the global distribution system linked to the IATA on December 22, following the passing of the court order in Canada. This is what could have led to a sudden non-availability of Air India’s tickets on platforms such as Amadeus, Travelport and others that travel agents use during the recent holiday season.