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Antrix row: Devas shareholders file fresh case holding Tatas liable for damages

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Shareholders of Devas Multimedia have filed a fresh letter with a US district court that aims to hold the Tata group liable for the damages that the Government of India owes to Devas in the decade-old dispute with Antrix Corporation.

The Devas shareholders hold an arbitral award of more than $111 million against India pursuant to arbitration in the Netherlands under the India-Mauritius Bilateral Investment Treaty. Since India has refused to pay the award, Devas’ shareholders have been pursuing the seizure of many Government of India assets, especially public sector units, in many international jurisdictions.

In June, Devas filed a petition in the US Court of the District of Colombia targetting Air India to enforce the arbitration award. The appeal was to declare that Air India is legally indistinct from the Indian government (that is, alter ego), find the flag carrier jointly and severally liable for any judgment against India, and allow execution, attachment, and other orders, requiring the airline to satisfy the liability owed to Devas’ shareholders.

Tatas, Air India pact

However, Air India recently signed a share purchase agreement with the Tata Group. This threw a wrench in Devas shareholders’ endeavours as Air India now argues that the forthcoming privatisation will moot this enforcement action and seeks to stay discovery pending its forthcoming motion to dismiss Devas’ petition. “Air India suggests that its sale to Tata Group will eliminate any possibility that Air India could remain an alter ego of India. Even if that were true as a factual matter — and it is not necessarily so — Air India is looking ahead, whereas the law looks back. The relevant time period for determining whether Air India is India’s alter ego is before this action was filed,” said the letter addressed to Judge Paul G. Gardephe of United States District Court Southern District of New York, sent by Matthew D. McGill, partner at Gibson, Dunn & Crutcher, and lead counsel for a number of Devas shareholders.

“If Air India is found to be India’s alter ego at the time of the arbitral award, Air India’s transfer should be subject to the plaintiffs’ claims. Tata will take control of Air India with the notice of plaintiff’s claim on a portion of its assets” McGill said on behalf of the Devas shareholders.

In their November 15 letter, Devas’ shareholders shared their intent to seek targetted discovery reasonably calculated to uncover Air India’s executable assets to prove the Devas’ shareholders’ alter ego claims. The discovery will assess Air India’s relationship to its owner India as well as the terms and status of Air India’s change in ownership.

Targetted discovery

“The transfer of control, when it occurs, will endanger the Devas shareholders’ ability to seek targetted discovery because it will be unclear who has control over relevant documents…Discovery as to the nature of the transaction by which the Tata Group will acquire Air India, and India’s motivations for it, is also urgent and appropriate, given the risk that this evidence will be moved out of the jurisdiction, lost, or rendered available as the sale goes through” the letter said.

Devas is seeking damages for Antrix’s decision to cancel a 2005 contract for building two satellites for Devas, citing alleged irregularities in the deal.



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