Devas investors issue new arbitration notice to GoI over failed 2005 Antrix satellite deal

The investors in Devas Multimedia and Antrix Corp, a commercial arm of the Indian Space Research Organization (ISRO) are engaged in a legal dispute over the cancellation of a 2005 satellite deal between the two firms. Devas Multimedia and its investors have already won a compensation award of $ 1.2 billion over the failed deal from an International Chamber of Commerce (ICC) arbitration tribunal and other tribunals.

“While the initial arbitration arose from India’s wrongful conduct in relation to its cancellation of the Devas-Antrix Agreement, this current dispute arises from India’s unlawful and abusive measures against Devas to preclude it from collecting on the ICC Award. Accordingly, claimants’ requests for relief relate to the wrongful conduct that was not the subject of the quantum award (which India, in any event, has not yet paid),” says the notice issued by the three Devas investors to the Indian government.

“India has failed to provide full protection and security (FPS) to the claimants and their investments,” says the notice and adds that “India’s harassment of Devas and its officers, followed by Devas’s takeover with the intent to prevent enforcement of the ICC Award, breaches India’s FPS obligations.”

“By singling Devas out for liquidation, India has accorded treatment of Claimants’ investments that is less favorable than that given to its domestic investors and investors of third-party states holding arbitral awards against India or its state agencies,” states the notice.

The investors have cited a letter of May 6, 2021 written to Prime Minister Narendra Modi calling for an amicable settlement of the dispute. “Claimants set out India’s unlawful actions and invited India to settle the dispute amicably. On 16 August 2021, India rejected claimants’ offer to engage in settlement discussions,” states the notice issued by the law firm Gibson, Dunn and Crutcher LLP. The notice says that the Prime Minister’s Office was told by advisers that “unless a ‘clear case of malafide’ can be made out against Devas, the Antrix case for annulment of (the ICC) arbitration award will be weak.”

The notice to the Indian government of fresh arbitration over the failed 2005 deal comes even as the Devas investors are attempting to seize assets of the Antrix Corp in the US through courts in that country to collect the compensations awarded over the failed deal.

Under the 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 were asked to investigate the deal.

After the cancellation, 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 for the failed deal.

Deutsche Telekom was awarded a $101 million compensation by the Permanent Court of Arbitration in Geneva, the Mauritius investors were awarded $111 million by the UNCITRAL, while Devas Multimedia itself was awarded $1.2 billion by the ICC (on September 14, 2015).

The compensation award to Devas Multimedia was confirmed by the US federal court for the western district of Washington on October 27, 2020. Antrix Corporation has gone in appeal to a US appeals court against this order and the Supreme Court of India has asked for the ICC tribunal award to be kept in abeyance through a November 4, 2020 order.

The Enforcement Directorate and the Central Bureau of Investigation in India are pursuing cases of money laundering and corruption in India against Devas and its officials. 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.