A US federal court has stayed efforts by foreign investors in the Bengaluru headquartered start-up Devas Multimedia Pvt Ltd to identify Air India as an alternate of the Government of India to recover compensation for a failed 2005 satellite deal between Devas Multimedia and Antrix Corporation, a commercial arm of ISRO. The US court for the southern district of New York imposed a stay last week on proceedings in pleas—filed by three Mauritius investors and the German telecom major Deutsche Telekom—for the identification of Air India as an alter ego of India and to find its assets in the US to facilitate recovery of compensations awarded by international tribunals over the failed satellite deal. The court has also turned down a plea by Air India to dismiss the demand by Devas' foreign investors to identify its assets. Air India cited its take over by the Tata Sons group on January 27, 2022, to seek the dismissal of the plea by the Devas' foreign investors. It stayed the proceedings in the cases filed by Deutsche Telekom and CC/Devas Mauritius, Telcom Devas Mauritius, and Devas Employees Mauritius Limited on the grounds that the foreign investors were seeking confirmation of compensations in another US court (in the district of Columbia) where the Republic of India has sought sovereign immunity to oppose the Devas' investors. A January 8, 2022, order of a Superior Court in the Quebec region of Canada—identifying Air India as an alter ego of the Indian government—was cited in the New York court by the Mauritius investors in the start-up firm Devas Multimedia to seek seizures of the carrier’s assets in the US to recover compensation over the failed 2005 deal. “The Court concludes that the instant cases are duplicative of Plaintiffs’ (foreign investors) confirmation proceedings in the D.C. district court. The relief Plaintiffs seek here is, at its core, the same relief they seek in the D.C. actions: a judgment recognizing and enforcing the final arbitration awards issued by The Hague Tribunal and the Geneva Tribunal against the Republic of India,'' the court for the southern district of New York ruled on February 4. “In the D.C. actions, the Republic of India has filed motions to dismiss in which it contends that it is immune from suit under the FSIA (Foreign Sovereign Immunities Act). Were the D.C. courts to conclude in the D.C. actions that the Republic of India is protected by the FSIA, and were this Court to conclude that Air India is a creature of the Republic of India, the rulings of the D.C. courts might well have a profound effect on the instant actions,'' it added. The court said simultaneous consideration of the same matter in two separate courts has “an obvious risk of inconsistent or conflicting rulings''. “Given the strong presumption of immunity afforded by the FSIA, and the possibility that the D.C. court’s resolution of the pending motions to dismiss could have a profound effect on the viability of the instant actions, the prejudice to defendant factor weighs in favor of a stay until the D.C. courts have resolved the pending motions to dismiss,'' it said. The court, however, refused Air India's plea to dismiss the cases in the New York court on account of the fact that the airlines is no longer a Government of India entity after its handover to the Tata Sons Group on January 27. “This Court cannot resolve on the current record what effect the sale of Air India will have on Plaintiffs’ claims. But Plaintiffs contend that the sale simply results in Air India’s liability being passed on to Tata Sons,'' it said. The New York court has asked the litigants to file joint letters every 60 days on the status of the cases in the district of Columbia court. The German telecom firm Deutsche Telekom filed a petition in the US District of Columbia court in April 2021 against the Government of India, seeking confirmation of compensation of over $135 million (including interest) awarded by a Permanent Court of Arbitration in Geneva in 2020 over the annulment of a Devas-Antrix satellite deal in 2011. In January 2021, the three Mauritius investors sought confirmation of a $111 million compensation award made by the United Nations Commission on International Trade Law. The Mauritius investors held a 37 per cent stake in Devas and Deutsche Telekom held a 20 per cent stake (in 2011) when the Indian government decided to annul the Devas-Antrix deal. In a separate move to the efforts to confirm the international compensation award in the US District of Columbia court, the foreign investors in Devas Multimedia also moved the US court for the southern district of New York to identify Air India as an alter ego of the Government of India and identify its assets to recover the compensations. The Devas' investors have also separately filed pleas in the US court for the western district of Washington to identify assets of the Antrix Corp in the US to recover compensation of $1.2 billion awarded to Devas Multimedia as a whole by an International Court of Commerce over the cancellation of the failed satellite deal. Under the deal, ISRO was supposed to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia. The start-up was to provide multimedia services to mobile platforms in India using the space band or S-band transponders on the space agency’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by ISRO. The deal was annulled by the UPA government in February 2011 amid the 2G crisis citing the requirement of the S-band spectrum for security purposes of the country. After the NDA government came to power in 2014 the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) were asked to investigate the deal. After the cancellation of the deal foreign investors in Devas Multimedia—Deutsche Telekom, the three Mauritius investors—and Devas Multimedia itself, approached various international tribunals seeking compensation for the failed deal. A $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 approached 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 ED and 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 in May last year citing fraudulence in its creation and this order was upheld by the Supreme Court of India on January 17, 2022.
