Eutelsat, freed by Paris court ruling, makes overdue payment on $424 million RSCC contract

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PARIS — Satellite fleet operator Eutelsat has paid its Russian counterpart, Russian Satellite Communications Co. (RCSS), monies overdue on a multi-year contract valued more than 400 million euros ($424 million) despite an ongoing legal battle between the Russian government and the shareholders of the former Yukos oil company.

The payment, which Eutelsat said represented satellite services previously rendered by RSCC and amounting to around 70 million euros, followed a ruling by the Paris Court of Appeal concluding that RSCC should not be considered an arm of the Russian government and thus liable for the government’s debts.

Moscow-based RSCC  and Eutelsat confirmed on Nov. 24 confirmed that the payment had been made, ending an uncomfortable chapter in the the fleet operators’ dealings. The Eutelsat and RSCC satellite fleets have overlapping coverage and the two companies have used each other’s capacity on occasion.

The former Yukos shareholders are continuing to battle in French courts for the right to seize payments by French companies to Russian government entities following an international arbitration body’s 2014 decision saying the Russian government illegally appropriated the Yukos assets and dissolved the company.

Among the Yukos shareholders left holding worthless Yukos equity were Hulley Enterprises Ltd. of Cyprus, which has devoted considerable energy to use French law to claw back some of the funds.

Still unresolved: Arianespace’s debt to Roscosmos for Soyuz rockets

The Nov. 23 Paris Appeals Court ruling has no effect on a parallel appeal dealing with around 300 million euros that launch service provider Arianespace, of Evry, France, owes to the Russian space agency, Roscosmos.

Roscosmos is Arianespace’s counterparty to the contract under which Russian companies provide medium-lift Russian Soyuz rockets for use by Arianespace from Europe’s Guiana Space Center spaceport in French Guiana.

The Russian government on Oct. 21 sent formal warning to the French government that it wanted a resolution of the Roscosmos payment by March 2017 or it would take France to court for violation of a 1989 bilateral treaty. The warning included references to unspecified other Euro-Russian space projects, suggesting that these might suffer if the legal stalemate continued past March.

The letter, sent to the French prime minister’s office, said Europe’s Galileo positioning, navigation and timing network, now being assembled in space thanks to the Europeanized Soyuz vehicle, is an example of Russia’s assistance to Europe.

Hulley Enterprises had grouped together more than a dozen Russian entities, including RSCC and Roscosmos, arguing that for all intents and purposes they are part of the Russian government. As such they are legitimate targets for collection of Russian government debt.

RSCC countered that it operates its business as a private-sector company and does not distribute its cash to the government or seek government aid to pay the company’s debts.

An earlier Paris court had agreed with the RSCC argument but its judgment had come with an order that no money be disbursed until a further court ruling. The Nov. 23 decision by the Paris Court of Appeal included no such payment-suspension order, and Eutelsat apparently transferred the money the same day.

“The positive ruling was achieved thanks to professional efforts of RSCC specialists and French lawyers acting on behalf of RSCC,” RSCC said in a statement.