US court: No need for Antrix to pay $1.1 billion deposit
Antrix Corporation has countered the case filed in the US court by Devas Multimedia, claiming that the firm does not come under the purview of US law.
Antrix has also claimed that it is fighting Devas Multimedia’s claims in an Indian court.
A United States federal court has exempted the Antrix Corporation, the Indian Space Research Organisation’s (ISRO) commercial arm, from putting down a deposit of $1.1 billion in a case where Bengaluru-based start-up Devas Multimedia Pvt Ltd is seeking compensation for the government’s 2011 decision to cancel a deal for ISRO to launch two satellites for the private firm.
In its order on July 10, the court in the western US district of Washington has exempted Antrix Corporation from paying a security deposit of $1.1 billion and stayed proceedings for a year in the case where Devas Multimedia is seeking confirmation of a compensation award of $563.4 million and interest made by an International Chamber of Commerce (ICC) arbitration court for cancellation of the satellite deal.
Antrix Corporation has countered the case filed in the US court by Devas Multimedia, claiming that the firm does not come under the purview of US law. Antrix has also claimed that it is fighting Devas Multimedia’s claims in an Indian court.
The US federal court has insisted that Antrix is liable under US law to face the compensation confirmation case brought by Devas Multimedia even as it stayed proceedings in the Washington court until April 15, 2020, to allow legal proceedings to end in India.
“Antrix is subject to this Court’s personal jurisdiction pursuant to the Foreign Sovereign Immunities Act (FSIA),’’ the Washington court ruled, while refusing to throw out the case on the grounds of lack of jurisdiction.
“The Court exercises its discretion to stay this action pursuant to Article VI of the New York Convention pending the resolution of Antrix’s challenge to the underlying award in India’s courts,’’ Judge Thomas S Zilly noted.
“The Government of India itself characterizes Antrix as a ‘corporate front of DOS/ISRO’ and as a virtual corporation housed within DOS/ISRO for the purposes of staffing, premises and all organizational support… Antrix has no satellite, satellite launch vehicle, transponder or electromagnetic spectrum of its own, but rather markets assets owned and controlled by ISRO and DOS. Most of Antrix’s commercial activities are financed by the Government of India. Much of Antrix’s leadership is appointed by the Government of India,’’ the court observed while stating that it has jurisdiction over Antrix under FSIA.
The Devas-Antrix agreement made in January 2005 was annulled by the UPA government in February 2011 in the backdrop of the 2G scam in the telecom sector, and allegations of a sweetheart deal in allocation of S-band spectrum to the fledgling firm Devas Multimedia. Under the 2005 deal, ISRO was to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia. The start-up firm was to provide multimedia services to mobile platforms in India using the space band — or S-band spectrum transponders — on ISRO’s GSAT 6 and 6A satellites, built at a cost of Rs 766 crore by ISRO. The NDA government, after assuming office in 2014, asked the CBI to investigate the deal. The CBI and ED have both filed chargesheets in the case.
During the hearing of the case for imposition of a stay, Devas Multimedia sought payment of a security bond of $1.1 billion by Antrix to protect the private firm’s interests during the pendency of the case.
Antrix argued that it would be unfair and illegal to make it pay a security bond.
Devas has been trying to get Antrix to pay a $563-million compensation, plus interest, awarded by an ICC tribunal on September 14, 2015, by getting the tribunal’s orders confirmed in international courts such as the US federal court in Washington.
The case in the US has proceeded even as the CBI and the Enforcement Directorate (ED) are pursuing cases against Devas Multimedia and former ISRO officials in India over alleged irregularities in the 2005 deal between Antrix and Devas to make and launch two satellites.
In August 2016, CBI filed a chargesheet against eight officials from Devas, ISRO and Antrix linked to the 2005 deal for “being party to a criminal conspiracy with an intent to cause undue gain”.
The ED has filed a chargesheet under Prevention of Money Laundering Act against a former managing director of Antrix and five Devas Multimedia officials.
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