In a major setback, India may have to pay $1 billion in damages after it lost the arbitration case at an international tribunal over its space marketing agency Antrix Corp annulling a contract with city-based private multimedia firm Devas.
A Permanent Court of Arbitration (PCA) tribunal-based in Hague ruled the Indian Government had acted “unfairly” and “inequitably” in cancelling contract involving use of two satellites and spectrum.
The tribunal 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 on Tuesday.
In its ruling, the PCA tribunal also found that India breached its treaty commitments to accord fair and equitable treatment to Devas’ foreign investors, the company said in a statement.
Many in Antrix and ISRO feel the verdict is a major embarrassment to India and it should resolve the issue by opening up dialogue with Devas.
Former Chairman of ISRO, G Madhavan Nair, feels it was better for the country to engage Devas into a dialogue and probably compensate on actual loss rather than presumptive loss. He said, “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,” he said, adding, “We have to engage Devas into a dialogue and probably we may have to compensate on actual loss, not a presumptive loss.”
In its response, the Government said it had invoked the essential security interests through “a well-reasoned, valid and proper” Cabinet Committee on Security (CCS) decision.
“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 UNCITRAl arbitration between Government of India and Mauritius based investors of Devas under the Indo-Mauritius BIPA (Treaty), the Arbitral Tribunal had issued their award on Jurisdiction and Merits, it said.
According to the statement, the Tribunal has dismissed the claims as regards violation of other provisions of the Treaty -- unreasonable or discriminatory measures, as also Most Favoured Nation treatment.
The DoS statement also noted that the Enforcement Directorate has issued a show cause notice to Devas for violation of FEMA, 1999 and is further investigating the case under Prevention of Money laundering Act, 2002. Enforcement Directorate had issued show cause notice to Devas for contravention to the provisions of FEMA, 1999.
Besides, the CBI has filed an FIR 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.
Antrix the commercial arm of ISRO had signed a deal with Bengaluru based Devas Multimedia in 2005 to build two satellites on which Devas would lease transponders in India. Bundled into the deal was 70 MHz of S-Band spectrum which was allegedly grossly underpriced at Rs 1000 crore. Former ISRO chairman G Madhavan Nair among others were blamed for their roles in the deal, triggering a row as Nair cried foul and said it was a conspiracy. The bungling in the deal had caused early exit of Nair as Chairman of ISRO. The contract was cancelled in 2005 by Antrix Corporation limited.
In September 2015, in a jolt to Antrix, the commercial arm of ISRO, 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.