Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1484268
36 www.lexpert.ca Top 10 Business Decisions WRITTEN BY AIDAN MACNAB, BERNISE CAROLINO, JASON TAN, AND ANGELICA DINO THE AIR India case addressed whether the assets of a state-owned company can be seized ex parte before judgment to pay off that state's debt. India owns Air India and Antrix Corpora- tion, and the latter executed several transac- tions with Devas Multimedia Services, giving rise to a significant commercial dispute. An arbitrator rendered two awards against Antrix. India was unsuccessful in having the awards set aside, and Devas was unsuccessful in enforcing them. On Nov. 24, 2021, Devas sought recog- nition of the arbitral awards before the Su- perior Court in Montreal and a first writ of seizure before judgment against all the sums owed by India or the Airport Authority of In- dia (AAI) to the International Air Transport Association (IATA). e writ was issued. Air India and AAI sought to dismiss the application and stay the seizure, alleging in- sufficient facts. In January 2022, the judge ruled that AAI and Air India were alter-egos of India, which was enough to allow the seizure of their as- sets. However, the judge permitted AAI's application for dismissal and quashed the seizure due to failure of notification. As for Air India, the judge allowed only in part, re- ducing the sum seized by half. Air India and AAI appealed the decision, e Air India case should be read together with Chevron Corporation v. Yaiguaje et al., says Lisus. e Supreme Court of Canada denied leave in Chevron in 2019. e case originated from a 2011 Ecuadorian judgment, which awarded US$9.5 billion to the plaintiffs for environ- mental damages. But Chevron had no assets in Ecuador, and the plaintiffs sought payment in lawsuits in the US and Canada. In Ontario, they sought to enforce the judgment against Chevron Canada, a Chevron subsidiary. Chev- ron was successful on summary judgment, con- firmed at the Court of Appeal, arguing that the corporate entities are legally separate. "Ultimately, the court found that you can't li the veil to enforce the debts of a parent, absent demonstrating fraud or the traditional 'alter ego' requirements," says Lisus. "e deci- sions also laid to rest this group enterprise the- ory of liability." In a group enterprise theory of liability, closely related organizations are viewed as part of a single enterprise. "ere's no group enterprise theory of liability to li the corporate veil," he says. AIR INDIA, LTD. V. C. CC/DEVAS (MAURITIUS) LTD., 2022 QCCA 1264 • Air India > Woods LLP > Patrick Ouellet, Ioana Jurca, Marc-Antoine Côté • The Republic of India > Stikeman Elliott LLP > Éric Mongeau, Patrick Girard, Vincent Lanctôt-Fortier, Marianne Bas- tille-Parent, and Benjamin Herrera • Airport Authority of India > Davies Ward Phillips & Vineberg > Willam Brock, Corey Omer, Amélie Lehouiller, Éloise Noiseux • International Air Transport Association > Dentons Canada LLP > Claude Morency, Anthony Rudman, Alexander Little, Charlotte Dion, Martin Poulin • Plaintiffs > Borden Ladner Gervais LLP (BLG) > Mathieu Piché-Messier, Karine Fahmy, Amanda Afeich, Philippe Boisvert, Dayeon Min, Ira Nishisato CLIENTS > FIRMS > LAWYERS which the appellate court allowed. But the Court of Appeal found Devas' po- sition irreconcilable with Quebec law. Devas wanted the court to li the corporate veil. Un- der the Quebec Civil Code, s. 317 sets out the factors required, says Louis Sévéno, partner at Woods LLP in Montreal. Section 317 reads: "e juridical personality of a legal person may not be invoked against a person in good faith so as to dissemble fraud, abuse of right or contravention of a rule of public order." "ey said we have no evidence that in- dicates Air India – which was created, pre- sumably, some 30–40 years ago, maybe more – was created for the purposes of perpetrat- ing fraud," says Sévéno. "It was created as an airline and functions as an airline. Unless you can show us why this corporate veil should be lied, you can't confound the patrimonies of Air India with that of India." e court also rejected Devas' assertion that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards al- lowed the seizure of property to satisfy a debt of a condemned state. e principal objec- tive of the convention is to prevent discrim- ination between foreign and non-national awards, said the court. Apart from that, the convention does not require that arbitral awards be subject to different and more fa- vourable rules than those of national awards.