Major setback for the Indian Government in Antrix-Devas contract case

28 Jul 2016 | Written by Ramya ; Edited by Gaurav

In a major setback to the Indian Government, the Hague-based Permanent Court of Arbitration ruled against it over the annulment of the Antrix-Devas contract.

The Indian Government was directed by the PCA tribunal to pay 40% of the investment made by Devas Multimedia's foreign investors as compensation.

Antrix Corporation is the Indian Space Research Organization's commercial arm; Devas Multimedia is a Bengaluru-based startup.

In context: The Antrix-Devas spectrum deal

IntroductionAntrix, Devas enter contract

In 2005, ISRO's commercial arm- Antrix Corporation and Bengaluru-based Devas Multimedia entered into a contract for manufacturing and launching two satellites to utilize Space Band Spectrum (S-band) available to India.

The UPA Government had annulled the deal amid the '2G Scam' following a Cabinet Committee on Security's decision in 2011.

Questions over handing the spectrum to a new firm were also raised.

US-based investors move a case against Antrix

The Antrix-Devas contract was for the 70 MHz S-band frequency that caters to multimedia services through leasing most transponders on GSAT-6 and GSAT-7 satellites for a period of 12 years. Following the annulment, Devas' US-based investors filed a case on Antrix.
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2013-15International Chamber of Commerce tribunal awards damages to Devas

The Antrix-Devas arbitration began in Jun'13 and reached the Hague-based Permanent Court of Arbitration in Sep'14.

The International Chamber of Commerce's tribunal awarded $672 million pre-award interest, and post-award interest at 18% per annum to Devas in Sep'15.

British and French courts also recognized the tribunal's award holding it as 'enforceable'.

In Nov'15, Antrix filed an arbitration case against the ICC's decision in Bengaluru.

CBI, EDCBI registers case against Antrix, Devas

In 2014, NDA government asked the CBI to take up the Antrix-Devas case.

In Mar'15, CBI filed a corruption case against officials of Antrix and Devas; the deal resulted in a Rs.578 crore loss to the Government.

The Enforcement Directorate also registered a case against Devas to investigate the flow of funds under the Prevention of Money Laundering Act and Foreign Exchange Management Act.

28 Jul 2016Major setback for the Indian Government in Antrix-Devas contract case

Financial compensation should be paid after the annulment

Lawrence Babbio, Chairman of Devas Multimedia, said in a statement, "With today's PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas' rights."
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Tribunal CourtTribunal court's award is being examined: DoS

The Hague-based Permanent Court of Arbitration tribunal addresses agreement disputes that are signed under United Nations Commission's rules on the International Trade Law.

The Department of Space acknowledged the PCA's order and said the award would be examined after which the Government would take an appropriate recourse.

Indian Government's security interest provisions of the agreement aren't applicable to this case up to an extent.

Compensation likely to be around $1 billion

The Department of Space stated: "The limited liability of compensation shall be limited to 40% of the value of the investment. The precise quantum has not been determined as yet." The compensation is likely to be around $1 billion.

DoS StatementSecond international tribunal ruling on the Devas-Antrix deal

The DoS said that the tribunal court issued their award regarding the UNCITRAL arbitration between the Indian Government and Devas Multimedia's Mauritius-based investors under the Indo-Mauritius Bilateral Investment Promotion Agreement.

It added the GoI reiterated that essential security interests were invoked through a valid, well-reasoned and proper Cabinet Committee on Security decision.

This was the second international tribunal ruling on the Devas-Antrix deal annulment.

12 Aug 2016CBI names former ISRO chairman in Antrix-Devas chargesheet

The CBI chargesheeted former ISRO Chairman G Madhavan Nair and other senior employees of ISRO for their alleged role in the Antrix-Devas deal.

They have been charged with facilitating wrongful gains worth Rs.578 crore for Devas Multimedia Limited.

Former Additional Secretary, Department of Space Veena S. Rao, former ISRO Director A. Bhaskar Narayana Rao and Antrix's ED, K.R. Sridhara Murthi have also been charged.