Devas-Antrix failed satellite deal: Bengaluru startup investors move US Supreme Court against order favouring ISRO’s commercial arm

The US advocates for ISRO’s commercial arm, the Antrix Corporation, filed a request before the US Supreme Court on May 23 seeking time until August 6, 2024, to respond to the petition filed by the foreign investors in Devas Multimedia. They cited permission already given to Devas Multimedia to respond to the petition by July 6, 2024.

On August 1, 2023, the US Appeals Court for the Ninth Circuit ruled that a US district court “erred in exercising personal jurisdiction over Antrix Corp. Ltd., an Indian corporation, under the Foreign Sovereign Immunities Act, because the plaintiff (Devas) failed to establish that Antrix had the requisite minimum contacts for personal jurisdiction”.

The order was a major relief for Antrix Corp and the Indian government which is fighting legal battles all over the world in connection with a 2011 decision of the United Progressive Alliance (UPA) government to annul a satellite deal inked in 2005 by Devas Multimedia and Antrix for the launch of satellite digital multimedia services akin to satellite internet services that is currently on the anvil for multiple service providers in India.

The foreign investors of Devas Multimedia who have approached the US Supreme Court are CC/Devas (Mauritius) Limited, Devas Multimedia America Inc, Devas Employees Mauritius Private Limited and Telcom Devas Mauritius Limited.

The foreign investors and a US subsidiary of the startup firm, which has been liquidated in India on the grounds of fraud in its creation, had approached the appeals court for a full court rehearing of the August 2023 order in favour of Antrix Corp but this was denied on February 6.

The foreign investors have stated in their petition to the US Supreme Court that the court “should grant certiorari and confirm that no minimum contacts analysis is required for foreign states sued under the FSIA”.

The Ninth Circuit court’s order that a foreign entity must have minimum contact or presence in the US to be liable to suits “undermines Congress’s goal of creating a uniform body of law concerning the amenability of a foreign sovereign to suit in United States courts,” the foreign investors in Devas Multimedia have argued.

An International Chamber of Commerce arbitration tribunal awarded a $1.2 billion compensation to Devas Multimedia and investors for the cancellation on September 14, 2015, and the US federal court for the western district of Washington confirmed the award on October 27, 2020.

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

“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 US Appeals Court ruled in August 2023.

“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 stated in its August 1 order.

“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 three judges on the appeals bench said last year.

Why Devas-Antrix satellite deal failed

The UPA government annulled the Devas-Antrix satellite deal in February 2011, citing the requirement that space spectrum be allocated for the satellite service for security needs. The deal was cited as another instance of corruption under the UPA regime after the 2G scam.

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, which were built at a cost of Rs 766 crore.

After the National Democratic Alliance (NDA) government came to power in 2014, the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) began investigating the deal even as the foreign investors in Devas – the German telecom major Deutsche Telekom, three Mauritius investors, and Devas Multimedia itself approached various international tribunals seeking compensation for the failed deal.

The International Chamber of Commerce awarded Devas Multimedia $1.2 billion on September 14, 2015. Deutsche Telekom received a $101 million compensation from the Permanent Court of Arbitration in Geneva, and the Mauritius investors received $111 million from the United Nations Commission on International Trade Law (UNCITRAL).

The National Company Law Tribunal (NCLT) in India ordered the liquidation of Devas Multimedia on May 25, 2021, citing fraud in its creation. The Supreme Court of India upheld the NCLT order on January 17, 2022.

The ED and the CBI are pursuing money laundering and corruption cases against Devas and its officials. A former ISRO chairman, G Madhavan Nair, is among those accused in the CBI case.