In the year 2005, Devas entered into a lease agreement with Antrix Corp, the private sector arm of the Indian Space Research Organization. Devas Multimedia, started by a few former ISRO officials and US businessmen. However, the 2005 agreement was terminated by Antrix in line with government policy in 2011-to reserve the S-Band for national and strategic purposes. This termination gave rise to 3 distinct sets of proceedings.
2005: According to an agreement signed in January 2005, Antrix agreed to build, launch and operate two satellites and to make available 70 MHz of S-band spectrum to Devas, which the latter planned to use to offer hybrid satellite and terrestrial communication services throughout India.
2011: The agreement was terminated by Antrix in February 2011. In June 2011, Devas commenced arbitration proceedings under the Rules of Arbitration of the International Chamber of Commerce.
2015: In September 2015, the arbitration tribunal asked the commercial arm of ISRO to pay USD 672 million. In his order dated October 27, 2020, Judge Thomas S Zilly, US District Judge, Western District of Washington, Seattle, asked Antrix Corporation to pay a compensation of USD 562.5 million to Devas Multimedia Corporation and the related interest rate, amounting to a total of USD 1.2 billion.
2018: Devas Multimedia, subsequently approached the US federal court for confirmation of the ICC arbitration award in 2018. Last year, the US court had imposed a give-year stay on proceedings to await progress in cases filed over the matter in Indian courts.
2020: On October 27, 2020, a US court had asked Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO), to pay a compensation of USD 1.2 billion to Devas Multimedia, a Bengaluru-based startup, for cancelling a satellite deal in 2011.
Chains of Litigation: The bee line of international commercial disputes sprung. Apart from the commercial arbitration at the ICC, the dispute between Antrix and Devas has also manifested two Bilateral Investment Treaty (BIT)-based arbitrations, CC/Devas vs India, under India-Mauritius BIT, and Deutsche Telekom v India, under the India-Germany BIT. Each of these proceedings resulted in an adverse award for the Indian government.,m
The ICC award has been upheld by a US Court as well as by the Paris Court of Appeal. In its liquidation order passed by NCLT, the NCLT has expressly directed the official liquidator to liquidate Devas as reported in media.
The BIT arbitrations are conceptually and legally distinct from the commercial arbitrations under ICC, notwithstanding that they were conducted in parallel.
The BIT tribunal in CC/Devas held the Indian government responsible for indirect expropriation, and violation of fair and equitable treatment (FET) standard of the BIT. In October 2020, it awarded $111.30 million plus interest in compensation to CC/Devas. In December 2017, the tribunal in Deutsche Telekom also held India responsible for the breach of FET contained in the India-Germany BIT, and in May 2020 awarded $101 million plus interest in compensation to the Deutsche Telekom which held 19 % shareholding in Devas. India challenged both these awards at their respective seats of arbitration – the CC/Devas award at the Hague District Court and the Deutsche Telekom award at the Swiss Federal Supreme Court. Both these courts have upheld the BIT awards.
The Centre-run Airports Authority of India (AAI) on Tuesday said it is taking legal recourse to defend itself from a Canadian court order that has allowed Devas Multimedia’s shareholders to seize an amount of over USD 30 million of the AAI held by the International Air Transport Association (IATA).
AAI as per newspaper reports has not been so far served any order by the Quebec Court, Canada in this matter. Going by the media report AAI is taking legal recourse to defend itself from the impugned order.
In a statement on Monday published in newspaper, a spokesperson of Devas Multimedia said an amount of over USD 30 million, which was held by global airlines body IATA on behalf of the AAI, has been seized by Devas Multimedia’s shareholders following a Canadian court order.
The IATA assists the AAI in collecting charges such as air navigation charges from foreign airlines. According to the spokesperson of Devas Multimedia, the Canadian court found that “AAI is India, in so far as it is an organ of the State of India inseparable from India or is the alter ego of India”.
“As a result, an order from this Honourable Court, recognising and declaring the treaty awards enforceable in Quebec, can be executed on AAI’s assets,” the court said.
Matthew D. McGill
PARTNER, GIBSON, DUNN & CRUTCHER
Matthew D McGill, a partner at Gibson, Dunn & Crutcher, and the lead counsel for several shareholders of Devas Multimedia, said, “We will pursue the Indian government in courts worldwide to ensure the debts owed to Devas are satisfied. Our action in Canada has resulted in millions of dollars garnished by Devas shareholders and represents the first fruits of a globally-focussed effort to be paid.”
The agreement was terminated by Antrix in February 2011. In June 2011, Devas commenced arbitration proceedings under the Rules of Arbitration of the International Chamber of Commerce.In September 2015, the arbitration tribunal asked the commercial arm of ISRO to pay USD 672 million. In his order dated October 27, 2020, Judge Thomas S Zilly, US District Judge, Western District of Washington, Seattle, asked Antrix Corporation to pay a compensation of USD 562.5 million to Devas Multimedia Corporation and the related interest rate, amounting to a total of USD 1.2 billion.
A federal court in the United States has asked Antrix Corporation, the commercial arm of the Indian Space Research Organization (ISRO), to pay Bengaluru start-up Devas Multimedia Pvt Ltd compensation amounting to $1.2 billion for canceling a January 2005 deal to build and launch two satellites to provide multimedia services via the space band spectrum.
The US federal court for the Western District of Washington confirmed an arbitration award made by the International Court of Commerce on September 14, 2015, in favor of Devas Multimedia — on account of the government cancelling the 2005 satellite deal in February 2011 by citing the need for usage of the S-band spectrum for security communications.
