In relief for Antrix Corp, US court reverses confirmation of $1.2 bn compensation for failed Devas satellite deal

“The district court erroneously concluded that a minimum contacts analysis was unnecessary to exercise personal jurisdiction over Antrix. Personal jurisdiction over a foreign state in a civil action is governed by the long-arm provision of the Foreign Sovereign Immunities Act (FSIA). The minimum contacts analysis is meant to define if a court has jurisdiction over an entity from another jurisdiction,” the US appeals court said.

“It follows that if a foreign state is not a person and thus not entitled to a minimum contacts analysis through the Constitution, it is still entitled to a minimum contacts analysis through our reading of the FSIA. Thus, the district court erred in ignoring our precedents requiring it to conduct a minimum contacts analysis,” the court ruled.

“Because we hold that the district court erred in exercising personal jurisdiction over Antrix, its judgment is reversed, and we need not address any of the other issues raised in the confirmation appeal. Because there is no judgment to register, the district court’s order permitting intervenors to register the judgment in the Eastern District of Virginia is also reversed, and we need not address any of the issues raised by the registration appeals,” the appeals court further ruled.

The order was delivered by judges Eric Miller, Lucy Koh and Donald Molloy.

The US federal court for the western district of Washington on October 27, 2020, confirmed a September 14, 2015 order of the International Chamber of Commerce for Antrix Corp to pay a compensation of $1.2 billion to Devas Multimedia following the Indian government’s decision to cancel a 2005 satellite deal between Devas Multimedia and Antrix Corp in February 2011. Antrix Corp appealed against this order before the US appeals court.

Three foreign investors in Devas Multimedia – CC/Devas Mauritius Ltd, Telcom Devas Mauritius Ltd, and Devas Employees Mauritius Pvt Ltd – also obtained an order on August 16, 2021, allowing the discovery of Antrix assets in the jurisdiction of the western district of Washington court. The district court on January 3, 2022, also allowed the foreign investors to find assets of Antrix in the Eastern District of Virginia in the US, to recover the $1.2 billion compensation.

Antrix Corp told the court at the time that Intelsat Service and Equipment LLC, a US company under bankruptcy proceedings in the Eastern District of Virginia, owed the ISRO commercial arm $146,457 and stated that this was the only asset of the company in the US. The US court for the western district of Washington allowed Devas to register its order in the Eastern District of Virginia.

The US appeals court has now ruled that Antrix Corp did not have sufficient local presence in the US for the courts to exercise jurisdiction on the foreign entity.

“Devas has failed to meet its burden under the first prong to show that Antrix purposefully availed itself of the privilege of conducting activities in the United States. Devas primarily relies on the Antrix and Indian Space Research Organization (“ISRO”) Chairman’s 2003 visit to Washington D.C. to meet with Forge Advisors and a series of 2009 meetings between ISRO officials and the Devas team,” the appeals court has stated in its August 1 order which is not meant to be a legal precedent in the US.

“Assuming that ISRO’s contacts with the United States may be attributed to Antrix, these meetings are still insufficient because they are not purposeful, but rather ‘random, isolated, or fortuitous’,” the US appeals court has stated.

“Principles of comity, diplomacy, and international law, including a panoply of mechanisms in the international arena, protect the interests that foreign states have in resisting the jurisdiction of United States courts,” one of the three judges on the bench said in a concurring opinion in the order.

Under the failed 2005 Antrix-Devas deal, ISRO was supposed to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia. The startup was to provide multimedia services to mobile platforms in India using the space band or S-band transponders on ISRO’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by ISRO.

The deal was annulled by the UPA government in February 2011 amid the 2G crisis by citing the requirement of the S-band spectrum for security purposes of the country. After the NDA government came to power in 2014, the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) began investigating the deal.

After the cancellation of the deal, the foreign investors in Devas Multimedia – German telecom major Deutsche Telekom, three Mauritius investors, and Devas Multimedia itself – approached various international tribunals seeking compensation for the failed deal.

Devas Multimedia was awarded $1.2 billion by an International Chamber of Commerce (on September 14, 2015); Deutsche Telekom was awarded a $101 million compensation by the Permanent Court of Arbitration in Geneva; and the Mauritius investors were awarded a USD 111 million by UNCITRAL.

The National Company Law Tribunal (NCLT) in India ordered the liquidation of Devas Multimedia on May 25, 2021, citing fraudulence in its creation. The NCLT order was upheld by the Supreme Court on January 17, 2022. The CBI and ED are currently pursuing cases of money laundering and corruption in India against Devas and its officials. Former ISRO chairman G Madhavan Nair is among those accused in the CBI case.