Court in The Hague rejects Indian govt plea against $111-million award to Devas investors

The Indian government approached the district court of The Hague in March 2022 for cancellation of the final arbitral award of 2020 by citing a January 2022 Supreme Court order which upheld the liquidation of Devas Multimedia on the charge of fraud brought by the Ministry of Corporate Affairs and probe agencies CBI and ED.

The district court, in an October 25 order, rejected the government’s plea to consider the Supreme Court order as fresh evidence of wrongdoing by Devas Multimedia in the process of securing the 2005 satellite deal with Antrix Corp.

It ruled that the charges of deceit, fraud and corruption brought against Devas Multimedia by India had already been dealt with by the Court of Appeal of The Hague while considering a challenge by India of an interim arbitral award for compensation.

“In this judgment, the District Court concludes that there are no grounds for setting aside the Final Arbitral Award. An important factor here is that the Court of Appeal of The Hague already assessed India’s assertions regarding the alleged fraud in the earlier setting aside proceedings concerning the Interim Arbitral Award and dismissed them (rightly so, in the court’s view),” the district court of The Hague said in its judgement last week.

In the proceedings, India had sought a “declaratory judgment that the Indian Supreme Court’s judgment should be recognised in the Netherlands”. The district court, however, turned down the plea and said no independent significance can be accorded to the order of the Supreme Court of India and that many aspects of the fraud allegation had already been considered.

“The District Court agrees with Devas et al. that the documents referred to… at 4.18 can only be considered further substantiation of the fraud accusations already rejected by the Court of Appeal of The Hague as being insufficiently reasoned. Therefore, no new basis has been provided with the new documents,” The Hague district court ruled.

“No independent significance can be attached to the decisions in the Indian Supreme Court’s judgment, because the Supreme Court did not conduct its own investigation into the facts,” the court ruled while making its own argument against the allegations of fraud.

“It follows from the foregoing that none of the grounds raised on behalf of India can lead to the setting aside of the Award on Quantum. The claim for setting aside the Award on Quantum is therefore rejected,” the judges D R Glass, I.A.M. Kroft and R C Hartendorp ruled.

The district court of The Hague also rejected a plea by India against a move by the Mauritius investors in Devas to assign the rights to claim the compensation to their parent companies in the US — CCDM Holdings LLC, Devas Employees Fund US, LLC and Telecom Devas, LLC — on account of Mauritius authorities moving to liquidate the Mauritius registered firms.

The setback in the district court of The Hague comes after recent wins in US courts in the legal dispute with the Devas investors over the failed 2005 deal.

In August this year, ISRO’s Antrix Corp was provided some major relief by the US court of appeals for the ninth circuit which reversed orders of a US federal court confirming a $1.2-billion compensation award made by an International Chamber of Commerce arbitration tribunal in favor of Devas Multimedia and its investors.

The US court of appeals in its order on August 1, 2023 ruled that Antrix Corporation enjoyed immunity under the Foreign Sovereign Immunities Act and that the district court of Washington had erroneously overruled this fact while confirming the ICC arbitration award and allowing Devas Multimedia to register the order in parts of the US to seize assets linked to Antrix Corp.

The US federal court for the western district of Washington had on October 27, 2020 confirmed a September 14, 2015 order of the ICC for Antrix Corp to pay a compensation of $1.2 billion to Devas Multimedia — over the February 2011 cancellation by the government of India of a 2005 satellite deal between Devas Multimedia and Antrix Corp. The ISRO commercial arm had gone in appeal to the US ninth circuit court against this 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 start-up 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 CBI and ED began investigating the deal.

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

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 $111 million by UNCITRAL.

The National Company Law Tribunal 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 of India on January 17, 2022. The Enforcement Directorate and the Central Bureau of Investigation in India are currently pursuing cases of money laundering and corruption in India against Devas and its officials.