Malaysian satellite operator Measat has filed a lawsuit against Intelsat accusing it of breach of contract and collusion with regard to the protracted launch of the Measat-3a satellite in 2009. Measat is seeking damages of US$29m plus punitive damages…
Malaysian satellite operator Measat has filed a lawsuit against Intelsat accusing it of breach of contract and collusion with regard to the protracted launch of the Measat-3a satellite in 2009. Measat is seeking damages of US$29m plus punitive damages and legal costs and has requested there be a jury trial.
The case is being held in the United States District Court, Central District of California, with Judge Ronald Lew as the presiding judge. Jones Day is legal counsel to Measat in its claim.
The lawsuit, which was filed on 27 April, stems from the contract signed between the two parties in March 2006, in which Intelsat was to provide Land Launch and related program management services for the launch of Measat-3a. The contract was worth approximately US$40.25m, with Measat contesting that this was a fixed and flat fee with no additional payments due prior to or after the launch.
Originally slated for January 2008, the launch date was subsequently postponed to August due to launch services provider Sea Launch experiencing hardware delays to the Zenit rocket.
When the satellite was delivered by its manufacturer Orbital Sciences to the Baikonur Cosmodrome in Kazakhstan at the end of July, it then suffered a series of mishaps. First, the satellite was badly damaged when it was hit by a subcontractor’s crane and then, on its return to Orbital Sciences to be repaired, was dropped by a separate crane as it was being loaded into the airplane cargo hatch. The cost of fixing the satellite was put at US$25m.
Measat claims that Intelsat did not exercise the same care in supervising the launch preparations for Measat-3a as it would have done had it been on of its own satellites thereby violating the contract.
Furthermore, Measat argues that when it sought a new launch date from Intelsat, which held a number of launch contracts following its acquisition of PanAmSat, the US-based satellite operator subsequently demanded a further US$11m to secure a prompt launch data. The alternative would have been for Measat to go out and order a new launch, something Measat says would have taken up to 18 months and doubled its cost.
The Malaysian operator claims that it refused to pay the additional sum, prompting Intelsat to return with a reduced charge of US$7.5m of which it would pay US$3m. According to the court documents, Intelsat allegedly said that the payment could also take the form of Measat equity or leased capacity.
In addition, Measat claims that Intelsat demanded that it sign a release of all claims associated with the damage caused to the spacecraft.
Given the financially parlous state that Measat found itself in due to the millions of dollars of revenue it had expected to generate from Measat-3a, which in turn led it to breach certain leverage covenants in its debt, Measat felt it had to pay the US$4.5m and sign the damages waiver in order to continue as a ‘going concern’.
To that end, Measat is suing for economic duress, breach of the convent of good faith and collusion between Intelsat and Sea Launch. The company has named Sea Launch as a co-conspirator.
Intelsat would not comment on the litigation, although did state, “based upon our initial review, we do not believe that the Measat litigation will be material to our business.”
