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UPA has much to answer for in Devas-Antrix. But Govt should take on board international rulings

🔴 Keeping aside the political posturing meant for a domestic audience, the government should also be mindful of the implications of not abiding by international norms. Not honouring global awards will have consequences.

By: Editorial |
Updated: January 20, 2022 9:49:06 am
The court’s verdict has provoked the BJP-led government to accuse the then UPA government of undertaking a “fraud deal”.

On Monday, the Supreme Court upheld the National Company Law Tribunal’s order to wind up Devas Multimedia, noting that “it is a case of fraud of a huge magnitude”. The government may well be within its rights to use the Court’s ruling to argue against the seizure of its properties internationally by Devas and its investors who are trying to enforce the awards by international tribunals. But every time the Indian government chooses not to accept international arbitration awards, or questions their validity, or challenges them in hope of a reversal, the country’s reputation as an attractive investment destination takes a beating. If the rationale for international arbitration and investment treaties is to provide safety and certainty to investors, then repeatedly seeking to contest arbitration awards — the government has in the past questioned the arbitration awards in favour of Cairn Energy and Vodafone — will only send the wrong signal to the global investor community. For a capital deficit country that is actively trying to woo foreign capital, moves such these are best avoided.

At the heart of the matter is a 2005 agreement between Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO), and Devas Multimedia for a 12-year lease of transponder space on two satellites. The agreement was abruptly cancelled in 2011 by the then UPA government after allegations of impropriety and sweetheart deals surfaced. Subsequently, Devas and its various investors approached international tribunals seeking compensation for the cancellation of the agreement. In 2015, Devas was awarded compensation by an International Chamber of Commerce tribunal, which was followed by awards for its investors who are now trying to enforce them by attaching assets of public sector entity Air India, which is in the process of being sold to Tata Sons.

The Court’s verdict has provoked the BJP-led government to accuse the then UPA government of undertaking a “fraud deal”. Clearly, those in power during that period have much to answer for. The failure to conduct adequate due diligence on the deal, the apparent absence of checks and balances, the conflict of interest, are all too glaring to be ignored. As such, the probes by the CBI and Enforcement Directorate must continue unhindered, and be taken to their logical conclusion, despite any political linkages of the accused. It is also true that the current government has been left to face the consequences of the manner in which natural resources were distributed by the previous government. But, keeping aside the political posturing meant for a domestic audience, the government should also be mindful of the implications of not abiding by international norms. Not honouring global awards will have consequences. After all, foreign investors look for predictability in policies. Any policy or regulatory uncertainty creates apprehensions. In future dealings, both the government and the space agency need to be more careful. The government must also tighten the regulatory architecture that governs such agreements — space, after all, is an increasingly attractive business opportunity.

This editorial first appeared in the print edition on January 20, 2022 under the title ‘Look in, and out’.

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