A January 8 order of a Superior Court in the Quebec region of Canada – identifying India’s public aircraft carrier Air India as an alter ego of the government of India – has been cited by investors in the startup firm Devas Multimedia to seek seizures of Air India assets in the United States to recover $111 million compensation over a failed 2005 deal with the Indian Space Research Organisation’s (ISRO) commercial arm Antrix Corporation.
In a January 13 letter to the judge of a US federal court for the southern district of New York, on behalf of three foreign investors in Devas Multimedia – CC/Devas Mauritius, Telcom Devas Mauritius, and Devas Employees Mauritius Pvt Ltd – a legal representative, Mathew D Mcgill, has cited the January 8 order of the Canada court to seek seizure of Air India assets in the US.
The three Mauritius-based investors are attempting to recover compensation awarded to them by an international tribunal over the cancellation of a 2005 satellite deal between Devas Multimedia and the Antrix Corp by the Indian government in 2011.
On January 8, the Superior Court of the province of Quebec in Canada – where investors in Devas Multimedia are pursuing seizure of funds deposited with the International Air Transport Association (IATA) by Air India, and the Airports Authority of India – identified Air India as an alter ego of GoI and allowed the preliminary seizure of 50 per cent of its IATA funds.
The Mauritius investors in Devas Multimedia are attempting to enforce a compensation award made against India for alleged violations of an India-Mauritius bilateral investment treaty by attaching assets of the state-run Air India which is set to be sold to the Tata Group.
“Petitioners write to notify the Court that in another case brought by petitioners before the Commercial Division of the Superior Court of Québec, Canada, to enforce the same arbitral award, the court recently entered a preliminary ruling that “Air India Ltd. . . . [is] the alter ego of the Republic of India and as such, [its] assets are subject to seizure just as if they belonged to the Republic of India,” says the letter of the Mauritius investors to the US court.
“Petitioners also seek to enforce their arbitral award against Air India’s assets in this action on the basis that Air India was and is an alter ego of India. Air India has stated that it intends to move to dismiss on the basis that it is not an alter ego of India and is therefore immune under the Foreign Sovereign Immunities Act,” states the January 13 letter to the US court.
Air India sent a letter on January 14 to the US court in response to the January 13 letter of the investors in Devas Multimedia to counter the claims Air India has been recognised as an alter ego of the government of India. The letters have been documented by the US court.
On January 8, 2022, the Superior Court in the Canadian province of Quebec upheld a provisional order issued by a Montreal court for seizure of deposits made by Air India with IATA but permitted seizure of only 50 per cent of the funds after Air India pointed out that its operations would be hampered by the seizure of all its funds with IATA.
The Superior Court in Quebec, however, struck down an order for the seizure of funds of the Airports Authority of India (AAI) that was deposited with the Montreal-headquartered IATA.
IATA, earlier on January 3, had declared that it was “holding USD 17,306,658.70 on behalf of Air India as of December 31, 2021, and USD 12,767,745.25 on behalf of AAI as of December 31, 2021” the Canadian court observed.
The investors in Devas have also argued in the courts in Canada and the US that there is an urgency to seize the assets of Air India due to the imminent sale of the stakes of the government of India in the airline to the Tata Group.
During the proceedings in the Canadian court, Air India did not claim immunity under a States Immunity Act, which AAI did, but argued that the funds seized by IATA represent “about 65% to 75% of its revenues” and seizure of this amount would require “Air India to carry out flights all over the world with barely 25% to 35% of its usual passenger sales revenues”.
According to the recordings of the proceedings – as documented in the order of the Canadian court – Air India argued that seizing its IATA funds would put its operations in jeopardy.
One of the significant observations made by the court in Canada – while affirming the preliminary attachment of 50 per cent of the funds of Air India available with IATA – is that actions taken by the Indian government against Devas Multimedia in India suggest that it would be “next to impossible” for investors in the firm to recover compensation in India,
“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 on a prima facie basis and leaves very little doubt in the mind of the Court that it would be next to impossible to execute the Treaty Awards within India leaving Plaintiffs with the sole realistic alternative but to execute the same on assets located outside that country,” the court in Canada stated.
“These actions made and the measures adopted by India within its jurisdiction, directly or indirectly via its wholly state-owned corporation Antrix as detailed in the sworn declarations go way beyond a legitimate contestation of the validity of the Treaty Awards before international courts and tribunals,” the court in Canada has stated while accepting that fears of the investors of non-payment of the compensation amounts by India are justified
The three Mauritius investors have also, meanwhile, moved the US federal court for the southern district of New York to be recognised as CCDM Holdings, LLC, Devas Employees Fund US, LLC, and Telcom Devas, LLC in future proceedings.
The Mauritius-based investors in Devas Multimedia have moved courts around the world to seize Indian government assets to enforce an October 13, 2020 order by a United Nations Commission on International Trade Law tribunal for state-run Antrix Corporation to pay $111 million as compensation for the cancellation of a Devas- Antrix satellite deal signed in 2005.
A court in Paris last year reportedly allowed the attachment of a property of the Indian consulate worth 3.8 million Euros.
On January 3, the US federal court for the Western District of Washington allowed the three Mauritius investors in Devas Multimedia to discover Antrix assets in the US eastern district of Virginia after investors indicated that Antrix has no assets in the Washington district.
Antrix Corporation stated in filings before the US federal court for the western district of Washington that it has very few assets in the US. Antrix has said that only two US companies – Intelsat Service and Equipment LLC and Yazmi USA LLC owed the ISRO commercial arm any dues that would be of interest to the investors.
“Intelsat owes Antrix less than $150,000. Intelsat filed for bankruptcy in May 2020, and those bankruptcy proceedings are pending in the US Bankruptcy Court for the Eastern District of Virginia. Yazmi owes Antrix less than $40,000. Aside from $186,304 owed by these two companies, the record reflects that Antrix does not have any assets in the United States,” Antrix has stated in US court filings.
Air India – which is being bought by the Tata Group – has opposed the move in the US federal court in the southern district of New York by foreign investors in Devas (including the German telecom major Deutsche Telekom) to identify Air India as an alter ego of the Government of India (ahead of the privatisation of Air India).
Under the failed 2005 Antrix-Devas deal, ISRO was supposed to lease two communication satellites for 12 years at Rs 167 crore to Devas Multimedia. The startup was to provide multimedia services to mobile platforms in India using the space band or S-band transponders on ISRO’s GSAT 6 and 6A satellites built at Rs 766 crore by ISRO.
The deal was annulled by the UPA government in February 2011 amid the 2G crisis by citing the requirement of the S-band spectrum for security purposes of the country. After the NDA government came to power in 2014 the CBI and ED were asked to investigate the deal.
After the cancellation of the deal foreign investors in Devas Multimedia – the German telecom major Deutsche Telekom, the three Mauritius investors, and Devas Multimedia itself, approached various international tribunals seeking compensation for the failed deal.
Deutsche Telekom was awarded a $101 million compensation by the Permanent Court of Arbitration in Geneva, the Mauritius investors were awarded $111 million by the UNCITRAL, and Devas Multimedia itself was awarded $1.2 billion by an International Chamber of Commerce (on September 14, 2017).
The $1.2 billion compensation award to Devas Multimedia was confirmed by the US federal court for the western district of Washington on October 27, 2020. Antrix Corporation has gone in appeal to a US appeals court against this order and the Supreme Court of India has asked for the ICC tribunal award to be kept in abeyance through a November 4, 2020 order.
The Enforcement Directorate and the Central Bureau of Investigation (CBI) in India are pursuing cases of money laundering and corruption in India against Devas and its officials. The National Company Law Tribunal in India ordered the liquidation of Devas Multimedia on May 25 this year citing fraudulence in its creation.
A spy satellite is among an array of sophisticated weapons systems that North Korean leader Kim Jong Un vowed last year to develop under military modernisation plans to cope with what he called hostile U.S. policies toward his country.
(File/Representational) 
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