Datalex gets €823,000 from Lufthansa in arbitration award

Datalex said on Wednesday that Lufthansa has been ordered by an international arbitration court to pay the Irish travel retail software provider €823,000, plus interest and some expenses, for services provided to the German airline group prior to the implosion of their working relationship two years ago.

The award is a victory for Datalex as the two parties remain locked in a multimillion-euro battle, in cases of lawsuit and countersuit before the regional court of Frankfurt.

Shares in the company closed 2.9 per cent higher at 70c in Dublin.

Lufthansa decided in September 2019 to terminate a major contract for Datalex to overhaul its digital commerce offering after the project, originally agreed in 2016, had gone over budget and missed key deadlines.

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Legal proceedings

Datalex commenced legal proceedings against Lufthansa in the regional court of Frankfurt shortly after the contract was pulled.

The Irish company's annual report for 2020 showed that it had invoiced balances due from the German carrier and its Swiss International Airlines unit of $2.9 million (€2.5 million). It had taken a provision in its accounts the previous year for the possibility of recovering none of amount, even though the directors said at the time that they strongly believed Datalex was entitled to the money.

Datalex had also notified Lufthansa as part of its action that it intended to claim more money by way of damages.

Datalex separately moved in March 2020 to issue a notice of dispute and invoke a contractual arbitration clause to recover amounts owed to it by Lufthansa’s Swiss International Airlines.

The international court of arbitration of the International Chamber of Commerce has now ruled that Lufthansa must play Datalex €823,000, plus interest, and bear its own legal costs as well as reimbursing the Irish company a portion of its costs associated with the case.

The award will ultimately allow Datalex to release some of the $2.9 million provision.

“Datalex will continue in pursuit of its other claims against Lufthansa,” the company said, referring to the Frankfurt court case, covering amounts Datalex claims it is owned, plus general business damages.

Countersuing

Lufthansa countersued the Datalex for at least €9.7 million in June, with the development coming just before the Irish company held an extraordinary general meeting to rubber-stamp the terms of a €25 million share sale to shore up the company’s finances.

Lufthansa is claiming damages and is requesting a declaratory judgment for potential further damages.

Datalex's irregular accounting of revenue from the contract triggered a financial scandal at the Dublin-listed group in January 2019, precipitating an overhaul of the company's board and management, cost-cutting and the need for emergency loans from its main shareholder, Dermot Desmond, to keep the business afloat.

Datalex reported four weeks ago that its revenue fell 5 per cent in the first half of the year to $12.6 million as the Covid crisis continued to impact its customers in the airline sector.

The company announced at the time that its chief financial officer, Niall O’Sullivan, who was hired two years ago to help stabilise the business, would leave the business by the end of the year.