$672 mn arbitration award: ISRO arm messed case before losing to Devas

Antrix, wholly owned by the Indian government, is the marketing arm of ISRO and is responsible for bringing business. In 2005, it entered into a commercial agreement with Devas for the lease of 90 per cent of transponder space on two satellites that ISRO planned to launch, along with 70 MHz of S-band spectrum to begin satellite-based multimedia services on handheld devices.

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The contract was terminated in 2011 under controversial circumstances, after which Devas resorted to arbitration, as provided for in the contract, seeking $1.41 billion as damages plus interest and costs.

Michael Pryles’s appointment as chairman of the arbitral tribunal could have been a case of conflict of interest, something that he himself hinted at on November 14, 2011 in a communication to the two parties.

Appointed to the post by ICC Court, Pryles is chairman of the Board of Directors of the Singapore International Arbitration Centre (SJAC), while Pallavi S Shroff of Amarchand & Mangaldas, one of the law firms representing Devas Multimedia in the case, is one of the directors.

“I note that counsel from three firms are representing the claimant, including Ciccu Mukhopadhaya of Amarchand & Mangaldas & Suresh A Shroff & Co. I wish to point out, although I believe it is unnecessary to do so under the IBA Guidelines on Conflict of Interest in International Arbitration nor the ICC Rules of Arbitration, that Mrs Pallavi S Shroff of that firm is a member of the Board of Directors of the Singapore International Arbitration Centre (SJAC)… which I chair. Members of the Board of Directors are not remunerated and SIAC is a not-for-profit company limited by guarantee. Mrs Shroff does not appear to be involved in this arbitration,” his letter said.

What he didn’t say in his letter is that Pallavi Shroff, who is managing partner of the now-divided Amarchand Mangaldas, was one of the senior partners of the law firm, a role in which she would have played an active part in the arbitration proceedings.

Although Antrix initially questioned his appointment — on November 24, 2011, Antrix wrote to the Secretariat and stated that there was “definitely a conflict of interest involved” on the part of Pryles — it did not pursue the matter. On November 29, 2011, the Secretariat informed Antrix that any challenge to an arbitrator should be made in accordance with Article 11 of the ICC Rules, and invited Antrix to state whether it wished to make a challenge concerning Pryles.

As per the award, no challenge was made.

On December 16, 2011, the Secretariat informed the parties that it had not heard from Antrix regarding any challenge to Pryles and it understood that Antrix did not wish to challenge Pryles.

Antrix also chose not to nominate one of the arbitrators to the tribunal. It kept asserting that any tribunal constituted under the ICC Rules of Arbitration would have jurisdiction to decide Devas’ claims.

When despite reminders, it chose not to nominate an arbitrator on its behalf, the ICC Court appointed former Chief Justice of India A D Anand as co-arbitrator on behalf of Antrix. Devas appointed V V Veeder, QC, as its arbitrator.

On its part, Antrix approached the Supreme Court of India, asserting that the tribunal did not have any jurisdiction. It sought a separate arbitration under the United Nations Commission on International Trade Law.

It asked the Supreme Court for an order that an arbitrator be appointed on behalf of Devas for that arbitration. The Supreme Court, however, rejected its application.

Thereafter, Antrix participated in the ICC arbitration even though it continued to maintain that the tribunal did not have jurisdiction.

Incidentally, Shardul Amarchand Mangaldas — the new entity formed after the division of the earlier law firm; Shardul is Pallavi’s husband and executive chairman of Shardul Amarchand Mangaldas — is also representing Devas Multimedia in the same matter before the Delhi High Court.

The Indian Express sent an email to Pallavi Shroff for comments on her link to Pryles but she did not respond..

On the failure of Antrix to field former ISRO chief K Radhakrishnan as expert witness, the tribunal, while refusing to “draw any adverse inference from Antrix’s failure to call Dr·Radhakrishnan”, observed, “…however, the tribunal is certainly surprised that he was not called by Antrix as a factual witness to assist the tribunal. Dr Radhakrishnan was undoubtedly the central person in the events that gave rise to this arbitration. He was in an unparalleled position to give direct evidence concerning them.”