Failed satellite deal: Isro’s Antrix Corp seeks favourable order from US Supreme Court as US business interest groups take side of start-up Devas

The appeals court had ruled that Antrix Corp enjoyed immunity under the Foreign Sovereign Immunities Act from arbitration awards since it did not have a sizable presence in the US. The US Supreme Court has posted the plea of Devas investors for arguments on March 3.

The Antrix Corp filed the briefing document following filings in December by the United States Council for International Business, the Chamber of Commerce of the United States of America, and the American Petroleum Institute supporting the stand of the foreign investors in Devas Multimedia – that an enterprise does not require to have business interests in the US for federal courts to confirm international arbitration awards,

“The core question here is whether any of this is properly the business of US courts. The Ninth Circuit correctly said ‘no’,” the Antrix Corp said in its filing in the US SC on Friday.

The Antrix Corp has argued against the plea of the Devas Multimedia investors for reconsideration of the appeals court order on the grounds that the Devas and Antrix agreement in 2005 did not involve settlement by arbitration under US laws. Antrix has also argued that “due process prohibits the exercise of personal jurisdiction over Antrix”.

Stand of Devas and US business interest groups

The foreign investors in Devas and some of the amicus curiae who made filings favouring Devas investors have argued that the 2005 agreement was subject to international agreements like the ‘New York Convention’ which allows arbitration awards to be confirmed in the US.

The United States Council for International Business (USCIB) has in its filings argued against the Ninth Circuit Appeals Court order in favour of Devas investors.

“The Ninth Circuit’s decision severely undermines U.S. businesses’ settled expectations when doing business abroad with foreign states or in heavily regulated industries. US businesses choose to contract with foreign states on specified contractual terms based in part on the understanding that the international arbitration system will offer protection in the event of a breach,” says the USCIB filing in the US Supreme Court.

“Following the Ninth Circuit’s unprecedented approach of requiring minimum contacts between the foreign state and the United States would subvert this established legal framework of accountability for foreign states that do not satisfy adverse arbitral awards, even though those foreign states consented to international arbitration to resolve disputes,” USCIB has stated.

“This outcome would expose US companies to excessive, unexpected, and asymmetric risks in their existing relationships, and would impair US companies’ ability to do business abroad safely in the future,” the filing says.

The Chamber of Commerce of the United States of America and the American Petroleum Institute have stated in filings that “no minimum contacts analysis is necessary to exercise personal jurisdiction over an alter ego of a foreign state”.

“This brief trains on the lurking constitutional questions and explains why foreign states — and their alter ego corporations — are not ‘persons’ entitled to the protections of the Due Process Clause of the Fifth Amendment,” says the joint filing.

Devas investors plea in US Supreme Court

On October 4, 2024, the US Supreme Court allowed pleas filed by the foreign investors in the Bengaluru-based satellite communication start-up Devas Multimedia for a ‘Writ of Certiorari’ hearing against the order of the appeals court which favoured Antrix Corp.

The US Supreme Court has framed the question it has to answer in the pleas by the foreign investors as “Whether plaintiffs must prove minimum contacts before federal courts may assert personal jurisdiction over foreign states sued under the Foreign Sovereign Immunities Act (FSIA)”.

The foreign investors filed the petition for a ‘Writ of Certiorari’ in May 2024 against a February 6, 2024, order of the US Court of Appeals for the Ninth Circuit which refused a re-hearing into its August 1, 2023, order.

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.

On August 1, 2023, the US Appeals Court for the Ninth Circuit had 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 plaintiff (Devas) failed to establish that Antrix had the requisite minimum contacts for personal jurisdiction.”

The August 1, 2023, 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 UPA government to annul a satellite deal inked in 2005 by Devas Multimedia and Antrix for the launch of satellite digital multimedia services using the S-band spectrum – the services were to be akin to the satellite internet services currently proposed in India.

The foreign investors have stated in their petition to the US Supreme Court that it “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.

Earlier Antrix filing in US Supreme Court

The state-owned Antrix Corporation which markets services of Isro stated earlier in the US SC that it is a company owned by the Government of India and is entitled to rights accorded to foreign corporations in the US in legal disputes.

In a filing on August 6, 2024, the Antrix Corporation argued that “Antrix is a state-owned corporation, not a foreign government. There is no need to consider whether foreign states are entitled to due process protections, either as a matter of statutory text or constitutional right, if Antrix – as a foreign corporation – is entitled to such protections anyway.”

“Antrix is a private Indian company owned by the Government of India. Antrix has provided space-related services since its incorporation in 1992, but Antrix is not an agent of the Indian Department of Space or the Indian Space Research Organization,” the response said.

Antrix has stated that its identity as a foreign corporation and not a foreign sovereign entity was not addressed by the US appeals court as well and the company is “entitled to due process even when they are not entitled to sovereign immunity under the FSIA”.

The Indian space firm has argued that it has no business interests in the US and as a consequence, the US courts cannot review and overrule a final judgment of the Supreme Court of India which upheld the setting aside of the $1.2 bn arbitration award.

Antrix has argued that “there is no longer an award to enforce because the Delhi High Court – the court of competent jurisdiction to determine the award’s enforceability – set it aside, a decision affirmed by the Indian Supreme Court.”

“It is unlikely Congress would abandon basic principles of comity and open U.S. courts to suits against foreign sovereigns in this way,” the Antrix Corporation has argued in its counter.

What the US appeals court said in 2023

An International Chamber of Commerce arbitration tribunal awarded a $1.2 bn compensation to the start-up Devas Multimedia and investors on September 14, 2015, for the cancellation of the 2005 satellite deal with Antrix Corp and the US federal court for the western district of Washington confirmed the award on October 27, 2020.

Isro’s commercial arm Antrix Corp went in appeal to the US appeals court against this confirmation order of October 2020.

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 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, 2023 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.

The background to the dispute

The United Progressive Alliance government annulled the Devas-Antrix satellite deal in February 2011 citing the requirement of space spectrum allocated for the satellite service for security needs. The deal was cancelled after it was cited as a “sweetheart deal”, and 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 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.

After the National Democratic Government government came to power in 2014, the CBI and ED began seriously investigating the deal even as 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.

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, the Mauritius investors were awarded $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 former Isro officials over the failed satellite deal. Former Isro chairman G Madhavan Nair is among those accused in the CBI case.