India has lost the arbitration case in an international tribunal over its space marketing agency Antrix Corp annulling a contract with city-based private multimedia firm Devas and may have to fork out millions of dollars in damages.
A Permanent Court of Arbitration (PCA) tribunal based in the Hague ruled that the Indian government had acted “unfairly” and “inequitably” in cancelling the 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 today.
Meanwhile, the government today said that its decision to annul the Antrix-Devas deal was taken considering the “essential security interests” through well-reasoned, valid and proper consultations in the Cabinet Committee on Security (CCS).
In a statement, Department of Space (DoS) said the limited liability of compensation will be only up to 40 per cent of the value of the investment and the exact quantum has not yet been determined.
The government will also examine legal recourse in this matter.
“The Tribunal has said that the government of India’s essential security interest provisions of the Treaty do apply in this case to an extent. The limited liability of compensation shall be limited to 40 per cent of the value of the investment. The precise quantum has not been determined as yet.
“We also remain committed to pursue our larger national interests including sovereign strategic security interests in this matter,” the statement said.
In its ruling yesterday, 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 here.
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).
Indian Space Research Organisation(ISRO) officials here said they were yet to get details of the ruling. The deal had cost five senior ISRO scientists, including its former chair man G Madhavan Nair, their government jobs.
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 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.
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.”
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.