Astrium Seeks 24.5 Million Euros from Conax

by PETER B. de SELDING, Space News Staff Writer

Date: 12 May 2008 Time: 06:48 AM ET

Satellite prime contractor Astrium of Europe is asking an international arbitration panel for 24.5 million euros ($37.8 million) in damages from Conax of Florida, a builder of satellite propulsion components, in a legal battle that began following a propulsion failure on board a commercial telecommunications satellite, according to industry officials and court documents.

In a dispute that Conax Florida Corp. of St. Petersburg wanted to resolve in a U.S. District Court, Astrium is arguing that an on-site inspection of Conax following the satellite problem found cracks in numerous Conax-built pyrovalves.

The satellite in question, the Amazonas spacecraft owned by Hispasat of Spain and launched in August 2004, continues to operate but its planned 15-year in-orbit life has been reduced by up to five years, according to Hispasat estimates.

Industry officials said insurance underwriters already have paid a partial settlement to Hispasat but are withholding any remaining payment until they are more certain of how much operating life Amazonas has left.

Officials said that following standard industry practice, Hispasat prime contractor Astrium established a board of inquiry to determine the cause of the propulsion system leak. Officials said that following a lengthy investigation, the inquiry concluded that a defective pyrovalve is the most probable cause of the Amazonas leak.

It was during this investigation that Astrium visited Conax to oversee delivery of the last of four batches of pyrovalves — 406 in all — to be delivered between 2001 and 2005. Pyrovalves are used to isolate segments of a satellite's propulsion system until needed during operations. They are also used on rockets.

Conax, which is owned by Cobham plc of Dorset, England, is a major producer of pyrovalves for satellites and launch vehicles.

According to documents on file at the U.S. District Court for Middle District of Florida, where Conax sought to settle the Astrium dispute, Astrium discovered cracking in one or more Conax pyrovalves during a visit to Conax in June 2005.

Astrium then asked for a re-inspection of pyrovalves already built and made ready for shipment. "[F]urther examination of earlier batches of pyrovalves also showed cracking," according to a July 18, 2007, court filing before the case was transferred to an International Chamber of Commerce arbitration panel in London.

Astrium demanded 24.5 million euros in damages from Conax. Conax officials said this amount was excessive given the value of the contract. According to the U.S. District Court, Conax "concedes that its pyrovalves failed, but it disputes the scope of its liability."

But Conax's attorney, Charles M. Harris of the St. Petersburg law firm Trenham, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, said the company has no knowledge of any connection between the defect that led to the Astrium dispute and the leak on board Amazonas.

In an April 17 interview, Harris expressed surprise that Conax's name has been linked to the Amazonas failure. He said that Conax no longer supplies pyrovalves to Astrium not because Astrium has refused delivery, but because Conax has refused to make shipments. Astrium, he said, has insisted on an open-ended product-liability regime that Conax cannot accept.

Astrium spokesman Patrice de Lanversin said the company would decline to comment on the Conax dispute, and also would decline to comment on the Amazonas failure review.

Elizabeth Bolint, director of contracts and legal counsel at Conax, declined to discuss whether Conax had participated in Astrium's Amazonas investigation. Industry officials said failure investigations normally would include the full participation of any company whose product was thought to be suspected in a failure. Company officials also would be asked to approve the inquiry's conclusions and recommendations.

In addition to Astrium, insurance underwriters apprised of the conclusions of the board of inquiry would have made sure that no other insured satellites under construction carried the suspected gear without being re-examined in light of the investigation, according to insurance and satellite industry officials.

Bolint declined to discuss the Astrium arbitration. Asked whether Conax has modified its production or inspection processes in light of the Amazonas issues, Conax responded April 24 with the following statement: "Conax has been supplying the space industry with pyrovalves since the Mercury program and our most recent success was noted on April 14th with the launch of Atlas 421 using over 10 Conax pyrovalves.

"As a general rule, our products are customized per customer requirements with reference to relevant flight history and qualification test procedures. Conax has continued to follow its standard practice of being very open with its customers and with the space community. However, it follows from customization that details affecting any one customer's pyrovalves are not valid for the valves of another customer."