Economy

Deutsche Telekom open to out-of-court settlement in Devas-Antrix dispute

Thomas K Thomas Mumbai | Updated on March 18, 2018 Published on March 18, 2018

German communications giant Deutsche Telekom has sent feelers for an out-of-court settlement to end the dispute with India over the annulled deal between Devas Multimedia and Antrix, the commercial arm of the Indian Space Research Organisation.

“We have always kept the position that we are in favour to resolve the matter in an amicable manner. A settlement is the preferred option,” Deutsche Telekom told BusinessLine in an email response.

India has lost arbitration proceedings at the the Permanent Court of Arbitration (PCA) tribunal based in The Hague and the ICC International Court of Arbitration.

An arbitration court in Paris is hearing the third arbitration, but three sources told BusinessLine that India may have lost the proceedings there. “The court, in an interim order, seems to have rubbished India’s claims of having annulled the contract between Devas and Antrix on security grounds. It is not clear if the ruling is being kept a secret to find ways for a settlement,” said a source close to the development.

BusinessLine could not independently verify if the Paris court has given a ruling. Emails sent to ISRO and Antrix seeking an update on the hearing yielded no response. Queries to Skadden, the US-based law firm representing investors of Devas Multimedia, went unanswered. The Deutsche Telekom spokesperson said the company “does not comment on ongoing arbitration procedures.”

The German operator had invested in Devas Multimedia, a satellite communications service provider that had entered into an agreement with Antrix in 2005. The dispute arose when Antrix cancelled a contract to build two satellites for Devas in 2011. The decision was backed by the UPA government.

However, with two losses in international courts, India may have to pay big to settle the dispute. The final award of the ICC shows that Antrix failed to nominate an arbitrator or have a say in fixing the terms of reference for the arbitral tribunal. The ICC ruling, which ordered Antrix to pay $672 million to Devas, reveals that Antrix did not even send its nomination for the three-member arbitration tribunal to the ICC. Rather, it chose to petition the Supreme Court to commence a separate arbitration against Devas, a plea that failed.

Security concerns

In 2016, the PCA tribunal poured water over India’s stand that the deal was scrapped only due to national security. Under arbitration rules, if a state properly invokes a national security exception, it cannot be liable for compensation of damages, going forward.

According to The Hague court order, India failed to push for this exception by not producing key officials, including K Radhakrishnan, Chairman of the Space Commission between 2009 and 2011; G Balachandran, then Additional Secretary, Department of Space; and Geeta Varadhan, Director of Special Projects at the Department of Space.

Published on March 18, 2018
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