Antrix-Devas: Faces $1 billion fine arbitration

antrix

An international tribunal has ruled that the Indian government had acted “unfairly” and “inequitably” in annulling a contract between city-based multimedia firm Devas and ISRO’s commercial arm Antrix, making it liable to pay financial compensation.

“A Permanent Court of Arbitration (PCA) tribunal has found that the Government of India’s actions in annulling a contract between Devas and Antrix Corporation Ltd. and denying Devas commercial use of S-band spectrum constituted an expropriation,” Devas said in a statement on Tuesday.

The statement further stated that the PCA tribunal unanimously found that by annulling the contract in 2011 and denying the commercial use of S-band spectrum, the Indian Government expropriated the investments of Devas’s foreign shareholders and also acted unfairly and inequitably, thus making it liable to pay financial compensation.

PCA administers cases under the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL).

In 2015 the International Chamber of Commerce (ICC) tribunal ruled that the Antrix’s annulation of the Devas-Antrix contract was unlawful and awarded Devas damages and pre-award interest of approximately $672 million, plus post-award annual interest accruing at 18 per cent until the award is paid in full.

Courts in the United Kingdom and France have recognised the ICC award and held that it is enforceable, Devas’s statement noted.

The UPA government’s action had come months after the Comptroller and Auditor General of India came out with a report on the 2G scam that had estimated a “presumptive loss” of Rs. 1.76 lakh crore due to flawed spectrum allocation process.

Under the deal signed in 2005, Antrix was to provide 70 MHz of the scarce S—Band wavelength to Devas for its digital multimedia services by leasing 90 per cent of the transponders in ISROs GSAT—6 and GSAT—6A satellites.

Devas, in turn, was to pay Antrix a total of USD 300 million over 12 years.

“With this PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas’s rights,” said Devas Chairman Lawrence Babbio, former Vice Chairman of Verizon, the largest telecommunications company in the United States.

“Other courts in France and the United Kingdom have agreed that the award against Antrix ought to be enforced. We prefer a mutually agreeable resolution of this matter. But until that occurs, Devas and its investors will continue to press their claims before international tribunals and in courts around the world,” he said

Antrix is the commercial arm of the Indian Space Research organisation (ISRO) set up in 1992 for consultancy and marketing activities by leveraging ISRO’s to get a hold in the fast growing commercial space market. Devas Multimedia, based in Bangalore, was set up by former ISRO scientists and some U.S. investors. According to Devas website investors included Deutsche Telekom AG, Columbia Capital LLC, and Telcom Ventures LLC.

In 2005 Antrix and Devas entered into an agreement for the long-term lease of two ISRO satellites operating in the S-band. The deal was for 70 MHz of S-Band frequency used to provide multimedia services by leasing most of the transponders on the GSAT-6 and GSAT-6A satellites for 12 years. Devas was to pay $300 million over the said period.

Wefornews Bureau

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