A Belgian aviation firm that was liquidated 20 years ago wants the national airline Air Namibia to pay N$420 million (25 million Euros) after the airline allegedly amassed outstanding debts for services such as maintenance, rent and insurance premiums.
Challenge Air has obtained a court order that compels Air Namibia to settle the debt within 10 days or risk having its Europe-bound aircraft being impounded.
Local business mogul Wilhelm Shali and Anicet Baum who are Challenge Air’s representatives are represented by prominent local lawyer Sisa Namandje.
There was shock within the top echelons of Air Namibia this week when it emerged that Challenge Air has not stopped pursuing monies owed to it.
What’s more shocking, an Air Namibia insider said, is the fact that Challenge Air was liquidated two decades ago and it has sold all its assets yet it continues to chase after Air Namibia.
According to court documents seen by The Patriot, Challenge Air claim that the award made in France on 4 August 2011 and the Munich appeal court ruling of 12 January 2015 is yet to be honoured by Air Namibia and TransNamib.
“In view of Air Namibia and TransNamib’s failure to pay we hold instructions to apply for the civil recognition of our client’s award against the two public entities and enforce judgments against the two entities and/or its shareholders should payment not be made within the next 10 days,” wrote Namandje in a letter addressed to works and transport minister John Mutorwa last week Wednesday.
Namandje called on Mutorwa to revert with an amicable proposal on how the matter could be resolved amicably without resorting to execution “which could have far-reaching consequences to both Air Namibia and TransNamib.”
On 4 August 2011, the arbitration court in France ruled that the two SOEs had to pay Challenge Air for services rendered as well as legal costs. The court set the amount in dispute at 25 million Euros.
Air Namibia subsequently opposed of the court order saying the Regional Appeal Court did not have jurisdiction for the declaration of enforceability of the arbitration award against them because no assets belonging to the airline was located in Germany.
Prior to the commencement of the arbitration, Air Namibia previously applied for, and was granted, an order in the High Court of Namibia declaring the relevant Arbitration agreement, and subsequent proceedings, null and void and unenforceable, and hence the reason why no attempt was made to enforce the award in Namibia to date.
The cash-strapped airline intends to challenge the latest court order.
The Patriot understands that Air Namibia, before the High Court on 3 December 2018, intends to cross examine Challenge Air’s witnesses on certain issues such as whether Challenge Air, from a comity of nations perspective should be recognized.
“In respect of the court orders issued on 10 May 2014, 31 May 2014 and 31 October 2015; -Whether all three judgments remain unsatisfied to date; -Whether Challenge Air was notified of the judgments and when; -Whether Challenge Air is honest about its knowledge of the existence of the judgments and whether or not it seeks recognition in the face of hiding behind the fact that it is not domiciled in or a resident of Namibia and can therefore simply ignore the orders; Testimony with respect to the session between Challenge Air and Belgian World Airlines, leading to the eventual agreement between Belgian World Airlines and United Technologies will also be tested,” reads an internal email correspondence sent by the airline’s Senior Manager for Legal Affairs Jerome Tjizo to the company’s executives earlier this week.
The airline’s spokesperson Paul Nakawa this week confirmed that the airline has received the papers served by Challenge Air. Nakawa said it is unfortunate “this matter is still persisting.
There is a possibility that we will be back in court so I cannot say much at this point in time. What I can say is that we are a responsible airline that fulfils all its contractual obligations,” he said.
Challenge Air unrelenting
Information obtained by The Patriot also indicates that Challenge Air’s rational for having approached the German court could be due to the fact that Air Namibia has a Ticket Sales Agent (Aviareps) as well as a bank account in respect of which an attachment may be effected, the airline further operates its aircraft to Frankfurt.
“As far as it relates to the Air Namibia aircraft, they are operated under lease agreements and can therefore not be attached. The fear in this respect relates to the fuel contained in the Aircraft.
The legal opinion provided in this regards indicates that, though Air Namibia aircraft cannot be attached by Challenge Air, it is indeed possible to attach the Kerosene (fuel) contained in the aircraft. The latter is due to the fact that, under German law, kerosene (fuel) is a movable physical object. The attachment of a movable physical object in the custody and control of the debtor is effected by the court’s appointed enforcement officer taking possession of it,” reads a document seen by this publication.
It further reads that: “Under German law therefore the enforcement officer does not have to examine whether the debtor is the owner of the physical object, or indeed entitled thereto. In this particular case the German law works on the general assumption that someone who has possession over a moveable object most likely is also the owner thereof. Otherwise the enforcement process would be complicated. One exception to this is that where it is evident to the enforcement officer that the moveable objects belongs to a third party, the officer has to refrain from the attachment.
“This has, however, only been acknowledged in very few cases. It has been accepted by German courts that even if the debtor presented written proof that the object belongs to a third party, this would not be sufficient to avoid attachment,” noted the document.
Air Namibia, according to senior airline officials, has recently been informed that Challenge Air has applied for an attachment order against Aviareps in respect of funds held by it on behalf of Air Namibia.
“These actions are aimed at recovering the legal costs to which Challenge Air is entitled by virtue of the proceedings which took place in Germany. Through these actions it has become evident that the matter has now reached a crucial stage, making action on the part of both Air Namibia and its shareholder urgent. It is clear that the executive seizure at Aviareps is aimed at all the assets belonging to Air Namibia and Transnamib actually held by Aviareps,” the document indicated.
9 March 1998: Air Namibia (lessee), Challenge Air SA (lessor) enter into sublease agreement
26 March 1998: Maintenance and crew support agreement concluded
27 July 1998: Air Namibia discovers that the aircraft was defective in material respects and Challenge Air was unable to rectify the defects, Air Namibia cancelled the agreement
28 July 1998: Challenge Air placed under liquidation
6 & 7 August 1998: Meeting held in Germany with the aim of attempting to resolve the uncertainty consequent upon the liquidation of Challenge Air and, no agreement reached
10 May 2004: Air Namibia obtains court order providing for the arbitration procedures to be stayed, pending cases in Namibian courts between parties
April 2004: Ancet Baum presses IATA to compel the applicants to proceed with the arbitration
16 January 2006: Parties meet in France to agree upon the sole arbitrator’s terms of reference and appointment as well as to lay down the initial procedural time table for the arbitration process
21 – 27 November 2006: Hearing takes place in London
30 March 2007: Post hearing briefs were submitted and filed
7 August 2008: Arbitration award handed down on as a part final award against Air Namibia, with all defenses raised by Air Namibia being dismissed
4 August 2011: Arbitration court in France rules that Air Namibia must pay Challenge Air for services rendered as well as legal costs
24 January 2014: Air Namibia receives service of the award through the German Embassy and containing a ‘Petition for declaring the enforceability of a foreign award’.
12 January 2015: Another order is given against Air Namibia in the Munich Regional Appeal Court
11 October 2018: Ministry of Works and Transport served with papers from Sisa Namandje& Co regarding Air Namibia’s debts