The Delhi High Court on Monday overturned an arbitration award against the Antrix Corporation, the commercial arm of the Indian Space Research Organization (Isro), in which it was asked to pay $562 million in damages, to a company based in Bengaluru. Devas Multimedia.
Here’s a look at the 11-year legal battle between the two sides.
2005: The Deal
In 2005, Antrix and Devas signed an agreement in which the latter would provide multimedia services using the S-band spectrum transponders on two Isro-built satellites at a cost of Rs 766 crore. Several foreign investors had backed the project, including three Mauritian investors and Germany’s Deutsche Telekom (DT), one of the world’s leading telecommunications companies.
The deal was quickly mired in controversy with allegations of corruption and irregularities, including claims that S-band spectrum was offered at rock bottom prices and Devas – which was created by former officials d’Isro and a company called World Space – had insider knowledge about the marketing of S-band spectrum.
Antrix called off the deal amid the 2G controversy. The cancellation was propagated by the United Progressive Alliance (UPA) government, following reports that the deal was a “quid pro quo” settlement between Antrix officials and Devas. In fact, the decision was taken much earlier and the Space Department had recommended cancellation on June 30, 2010. The Indian Space Commission agreed on July 2, 2010, but the decision was not communicated to Devas and was directly announced publicly in February. 2011.
2012-13: Claims under the Bilateral Investment Treaty
The government’s decision to cancel the contract prompted foreign investors in Devas to file separate Bilateral Investment Treaty (BIT) claims against India under the India-Mauritius BIT and the India-Germany BIT , respectively.
BITs are designed to prevent unwarranted interference or violation of the rights of foreign investors by establishing regulatory restrictions on the host state’s power to intervene.
Against the two separate BITs, India argued that the deal was canceled given the growing demand for S-band satellite spectrum for national security purposes.
The DT tribunal started in May 2014, while the India-Mauritius BIT tribunal started in September. India relied on Article 11(3) of the India-Mauritius BIT, which provides:[T]The provisions of this agreement do not in any way limit the right of either of the contracting parties to apply prohibitions or restrictions of any kind or to take any other measure aimed at the protection of its interests. essential for the safety or protection of public health or the prevention of disease in companion animals and animals or plants. India argued that reserving S-band satellite spectrum for defense and paramilitary purposes was to protect its “essential security interest”.
In both cases, however, the courts awarded the case to the Devas investors, citing delays and indecision in the reallocation of S-band spectrum as an indication that there was no immediate need or need. urgency to recover the spectrum, and that India had breached its obligation to investors under the two BITs. The two tribunals ordered India to pay $160 million and $132 million, plus accrued interest, to the Mauritian and German investors respectively in 2020.
In addition to the BIT disputes, the International Chamber of Commerce oversaw the international commercial arbitration that Devas initiated against Antrix. The ICC court also ruled that Antrix’s termination of the contract was unlawful and ordered Antrix to pay Devas $562.5 million in damages.
2021-22: Recourse in liquidation
In January 2021, Antrix contacted the National Company Law Tribunal (NCLT), seeking liquidation of Devas on the grounds that the company was incorporated with a “fraudulent motive”.
In May, the NCLT ruled in favor of Antrix and ordered the liquidation of Devas, who then challenged the order in the National Company Law Appellate Tribunal (NCLAT), Bengaluru.
In September, the NCLAT upheld the NCLT order. The case then went to the Supreme Court.
In January 2022, the Supreme Court upheld the liquidation order. He also rejected Devas’ claim that Antrix’s liquidation motion was intended to deprive it of the benefit of prior favorable arbitration awards.