India has lost an arbitration case in an international tribunal over its space marketing agency Antrix Corp scrapping a deal with multimedia private firm Devas and is liable to pay compensation that could run into millions of dollars.
The Hague-based Permanent Court of Arbitration in a ruling said the Indian government had acted ‘unfairly’ and ‘inequitably’ in nullifying the contract, the Bengaluru-based Devas Multimedia Private Ltd said in a statement on Tuesday. The deal involved use of two satellites and spectrum in 2011.
The tribunal has found that Indian government’s actions in the contract and denying private firm Devas commercial use of S-band spectrum constituted an expropriation, it said.
In its ruling on Monday, the PCA tribunal also held that India breached its treaty commitments to accord fair and equitable treatment to Devas’s foreign investors, it added.
Reacting to the ruling, the government said it had invoked the essential security interests through ‘a well reasoned, valid and proper’ Cabinet Committee on Security decision.
It also said the limited liability of compensation shall be limited to 40 per cent of the value of the investment, adding, the precise quantum has not been determined as yet.
‘The award of the tribunal is being examined and legal recourse, as deemed fit, will be taken. We also remain committed to pursue our larger national interests including sovereign strategic security interests in this matter,’ the Department of Space said in a statement.
In the United Nations Commission on International Trade Law arbitration between the government of India and Mauritius based investors of Devas under the Indo-Mauritius Bilateral Investment Promotion and Protection Agreement (Treaty), the Arbitral Tribunal had issued their award on Jurisdiction and Merits, it said.
The tribunal has said that the GoI’s essential security interest provisions of the Treaty do apply in this case to an extent, the DoS statement added.
In September 2015, in a jolt to Antrix, the commercial arm of Indian Space Research Organisation, the International Chamber of Commerce’s arbitration body International Court of Arbitration had asked it to pay damages worth $672 million (Rs 4,432 crore then) to Devas Multimedia for "unlawfully" terminating the deal five years ago on grounds of national security.
The PCA regularly administers cases involving states, including investment treaty claims brought under arbitration rules of the UNCITRAL.
The deal had cost five senior ISRO scientists, including its former chairman G Madhavan Nair, their government jobs.
The unanimous decision that included the arbitrator appointed to the tribunal by India is the second by an international tribunal arising out of the cancellation of the Devas-Antrix contract.
The tribunal then had noted that Antrix had no legal justification to terminate the agreement and that Dr K R Radhakrishnan, who at the time of annulment, was secretary, Department of Space and chairman of the ISRO, Antrix and the Space Commission, could have prevented the CCS from approving the annulment.
The CCS had annulled the deal based on the recommendation of the Space Commission on the ground that it was not in the security interests of the country.
“It’s unfortunate that International court has come to such a conclusion. What we have to do this time is to pull up all our resources and fight out this issue in the appellate court, so that we can control the damage,” Nair said.
“We have to engage Devas into a dialogue and probably we may have to compensate on actual loss, not a presumptive loss.”
The DoS statement also noted that the Enforcement Directorate has issued a show-cause notice to Devas for violation of Foreign Exchange Management Act, 1999 and is further investigating the case under Prevention of Money Laundering Act, 2002.
The ED had issued show-cause notice to Devas for contravention to the provisions of FEMA, 1999. Besides, the Central Bureau of Investigation has filed a first information report against, inter-alia, Devas Multimedia Pvt Ltd and other unknown public servants of Antrix/ISRO/DOS and the case is under investigation, the statement said.
Under the deal signed in 2005, Antrix was to provide 70 MHz of the scarce S-Band wavelength to Devas for its digital multimedia services by leasing 90 per cent of the transponders in ISROs GSAT-6 and GSAT-6A satellites.
Devas, in turn, was to pay Antrix a total of $300 million (Rs 200 crore) over 12 years.