A private Dubai company handled security at Afghanistan airports from 2018-2020. They weren’t fully paid for their services, and their contract was cancelled and given to another company at a higher price. There’s a suggestion of graft involved in both cases, it seems like some of their payments were skimmed and that the President of Afghanistan intervened to direct funds to a favored firm.
Then the Taliban retook Afghanistan, but that didn’t cancel out Afghan debits. The Dubai company won over $15 million in arbitration and they’re trying to collect. IATA holds fees paid by airlines to overfly Afghanistan territory in a Swiss bank account, and the funds were frozen because of Taliban links to terrorism. So the security company wants to seize those funds.
They sued in Washington, D.C. where IATA has lobbying offices – a court was persuaded they’re owed the funds, that funds held by IATA were eligible for garnishment, but that it lacked jurisdiction over the IATA overfly fees held in Switzerland.
- Olive Group out of Dubai provides airport and aviation security. They contracted with the Afghanistan Civil Aviation Authority in 2018 to provide security services at four international airports.
- However, Olive argued that ACAA breached the contract “on several occasions,” commenced arbitration in Dubai in 2021, and obtained a final award on November 28, 2023 for $15.3 million plus 3% post-award interest until payment.
- The contract was worth about $38 million, but the regulator kept 10% of monthly revenue, and personnel fee and work visa problems caused by the agency forced them to lose the Canadian Embassy security contract. Then the agency terminated the Olive deal in 2020, giving the contract to a different company without bidding and at a higher price, apparently directed by then-President Ashraf Ghani.
Olive pursued Afghanistan over breach of contract, for withholding funds and wrongful termination. ACAA argued that it was entitled to keep the 10% amounts, and that it couldn’t fully defend itself in arbitration proceedings because the Taliban overthrew the government – and since Taliban wasn’t internationally recognized they couldn’t find foreign consultants and legal representation. Those arguments were dismissed.
Then the Afghanistan Civil Aviation Authority failed to appear in the U.S. when Olive sought to enforce the award, so they obtained a default judgment consistent with the contract’s provisions for arbitration. However, Olive was unable to garnish funds held by IATA because the D.C. court lacked jurisdiction over IATA.
The funds at issue were overflight fee collections paid by airlines for the right to pass through Afghan airspace, collected by IATA for the state agency prior to the Taliban takeover. Those funds were held in a Swiss bank account. IATA terminated its relationship with Afghanistan after the Taliban takeover because of anti-terrorism laws. That account holds $3.1 million.
They argued IATA was subject to jurisdiction in D.C. because it had a long-running D.C. presence: lease agreements, two employees, payroll tax payments, lobbying activity, coordination with other air transport organizations, and regulatory advocacy. IATA represented its principal place of business was D.C. for venue purposes in a 2016 lawsuit. However,
- The court didn’t have general jurisdiction because that applies where it’s incorporated or where its actual principal place of business is – and IATA is incorporated in Canada and its North American headquarters is Miami.
- And it didn’t have specific jurisdiction because the funds were in Switzerland and arose from IATA’s collection of fees for travel through Afghanistan airspace – and not from IATA’s D.C. lobbying efforts or D.C. office costs.
Olive has filed a “near-identical garnishment action” against IATA in the Southern District of Florida, where IATA is headquartered. Meanwhile, the Taliban has found overflight fees to be one of its most reliable sources of revenue charging $700 a flight while airlines avoid Russian airspace.