Air India wins major arbitration case against US-based airline Dynamic

Arbitrator tells Dynamic to pay Rs 65.71 crore to the state-owned Indian airline

In a major victory for government-owned Air India, the airline won an arbitration case against US-based air charter company Dynamic International Airways, putting an end to a more than three-year-old legal tussle between the two parties. The order given by arbitrator, former Comptroller and Auditor General P Sesh Kumar will require the US-based charter operator to pay an amount of around Rs 65.71 crore to the national airline.

The arbitrator has also rejected Dynamic Airways’ counter claims of Rs 108.45 crore from Air India.

Air India now plans to move the US judiciary so that the order can be enforced under the laws of United States. Since Dynamic is a US-based company, it is necessary that the hearing is done in US courts under the United States Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T 2517. 

Air India will also file a caveat petition in the Delhi High Court so that in case the award is challenged by Dynamic, Air India gets an advance notice of hearing.

An Air India spokesperson said that it was a major victory for the company following a prolonged legal battle. “It will help to recoup the airline’s expenses and we will take all steps to enforce the award in foreign jurisdiction against the party,” the spokesperson said. Business Standard could not immediately contact the spokesperson of Dynamic Airways. 

Under an agreement signed in 2014, US-based Dynamic was supposed to provide aircraft to Air India to carry passengers during Haj. Air India is the nodal carrier from India for undertaking Haj operations.

Problems started once operation started. Dynamic Airways arbitrarily reduced number of planes it originally agreed to provide. Dynamic agreed to carry only two-third of the 36,000 passengers who were supposed to be carried from India to Saudi Arabia and back. This resulted in a massive mismanagement of the Haj operations in 2014 leading to several flights being cancelled or delayed by several hours — numerous cases of lost baggage were registered. The situation was so serious that the Saudi envoy to India criticised Air India for operations following which Air India stopped outsourcing Haj services to external parties.

Dynamic had earlier filed a notice in front of the US courts that the dispute should be heard in US courts and not in India. A US federal court rejected the claims allowing the arbitration case to be settled in India.

Dynamic also said that P Sesh Kumar was not eligible as an arbitrator in this case as he was a former employee with Government of India and under Indian Arbitration Law, anyone who has a past or present business relationship with a party is disqualified to oversee such a dispute.