Intelsat upsets ITSO with non-payment
May 26, 2020
By Chris Forrester
The International Telecommunications Satellite Organisation (ITSO) is the international group that overseas and monitors Intelsat’s public service obligations. Its members are drawn from 149 member states and is itself governed by the United Nations, and it was the UN which established Intelsat in 1973.
ITSO has no means of raising money itself. The means of an agreement in 2001 led to the creation of Intelsat as a private company, and established the model with Intelsat obliged to pay an amount annually to fund ITSO. Now Intelsat allegedly hasn’t been paying its obligations.
ITSO, in a filing to Intelsat’s bankruptcy court, says that since July 2019 ITSO has “attempted to engage in good faith negotiations with Intelsat over the course of several months to agree a level of funding for FY 2020 and FY 2021”.
Beginning in July 2019, absent funding from Intelsat, ITSO funded its own operations using a limited cash reserve that was established as a result of careful spending during previous years.
ITSO submitted a Request for Arbitration in November 2019 to the International Chamber of Commerce (ICC) tribunal to arbitrate a solution between the two parties, under Article 6 of the ITSO/Intelsat Public Service Agreement dated July 2001. The Tribunal ordered that Intelsat immediately pay $101,000 in March this year as an interim payment. But Intelsat hasn’t paid the sum, and the bankruptcy has somewhat stayed proceedings with the ITSU now alleging that Intelsat is in breach of its core agreement.
Consequently, the ITSO is asking the bankruptcy court to intervene for payments due in 2020 and 2021. ITSU, in its filing, told the bankruptcy court that the sum it seeks is trivial when set against the huge sums involved in Intelsat’s bankruptcy, but the cash is vital to keep its organisation going.
The Court will hear arguments on June 9th.