India loses big in Antrix-Devas arbitration case at the Hague

Bengaluru: An international tribunal has ruled that the Indian government had acted “unfairly” and “inequitably” in annulling a contract between Bengaluru-based multimedia firm Devas and ISRO’s commercial arm Antrix, making it liable to pay financial compensation.


A Permanent Court of Arbitration (PCA) tribunal based in the Hague has found that the Indian government’s actions in annulling the contract and denying Devas commercial use of S-band spectrum constituted an expropriation, Devas Multimedia Private Ltd. said in Bengaluru.


In its ruling on Monday, the PCA tribunal also found that India breached its treaty commitments to accord fair and equitable treatment to Devas’s foreign investors, the company said in a statement.


The PCA regularly administers cases involving states, including investment treaty claims brought under arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL).


ISRO officials in Bengaluru said they were yet to get details of the development.

The ruling is the second by an international tribunal arising out of the cancellation of the Devas-Antrix contract.


The unanimous decision included the arbitrator appointed to the tribunal by India, Devas said.

In September 2015, in a jolt to Antrix, the International Chamber of Commerce’s (ICC) arbitration body International Court of Arbitration had asked it to pay damages worth USD 672 million (Rs 4,432 crore then) to Devas Multimedia for “unlawfully” terminating the deal five years ago on grounds of national security.


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 ISRO, Antrix and the Space Commission, could have prevented the Cabinet Committee on Security (CCS) from approving the annulment.


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.


The UPA government’s action had come months after the Comptroller and Auditor General of India came out with a report on the 2G scam that had estimated a “presumptive loss” of Rs 1.76 lakh crore due to flawed spectrum allocation process.


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 USD 300 million over 12 years.


“With this PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas’s rights,” said Devas Chairman Lawrence Babbio, former vice chairman of Verizon, the largest telecommunications company in the United States.


“Other courts in France and the United Kingdom have agreed that the award against Antrix ought to be enforced. We prefer a mutually agreeable resolution of this matter.


“But until that occurs, Devas and its investors will continue to press their claims before international tribunals and in courts around the world,” he said.