How Antrix lost $1.2-b arbitration award to Devas at Washington court

Our Bureau Mumbai | Updated on October 30, 2020

Decision of ISRO arm to not appoint arbitrator at 2011 ICC proceedings comes back to haunt it

Antrix’s decision not to appoint an arbitrator at the proceedings held at the International Chamber of Commerce (ICC) in 2011 has come back to haunt the commercial arm of the Indian Space Research Organization (ISRO) in its ten-year-old battle with Devas Multimedia.

The US federal court for the Western District of Washington, which has now asked Antrix Corporation to pay $1.2 billion to Devas Multimedia as per the arbitration award of the ICC, relied on the proceedings at the ICC to uphold the arbitration award.

Also read: US court upholds ICC arbitration award, tells Antrix to pay $1.2 b to Devas Multimedia

“The ICC gave respondent (Antrix) at least three opportunities to appoint its own arbitrator in accordance with the agreement and the ICC rules, and respondent never did so. The court also notes that although respondent challenged the ICC’s jurisdiction to arbitrate the dispute, it never specifically challenged the ICC’s appointment of former Supreme Court Chief Justice Dr AS Anand on its behalf,” the US federal court for the Western District of Washington observed in its order on October 27.

Satellite building agreement

The arbitration award was given in 2015 after Antrix cancelled an agreement to build, launch, and operate two satellites and make available 70 MHz of S-band spectrum. Devas had challenged Antrix’s decision to cancel a 2005 contract for building two satellites for Devas, citing alleged irregularities in the deal. The decision was backed by the then UPA government.

The US court, however, said Antrix “does not argue, let alone cite any facts showing, that the agreement was the product of corruption or that the respondent (Antrix) annulled the agreement on that basis.”

Also read: Antrix-Devas case: Words that lost India the battle of The Hague

In July 2011, after Devas had commenced the arbitration in the ICC Court, Antrix did not respond to the ICC’s request to nominate an arbitrator and instead challenged its jurisdiction to arbitrate the parties’ dispute. In August 2011, the ICC informed the parties that the “arbitration shall proceed” pursuant to the ICC rules, and the ICC again requested that Antrix appoint an arbitrator within 21 days. On October 13, 2011, the ICC appointed former Supreme Court Chief Justice AS Anand on Antrix’s behalf.

In May 2013, the Supreme Court held that the proceedings initiated under ICC could not be interfered with. Antrix kept arguing that the ICC lacked jurisdiction to arbitrate the dispute. It adopted the same tactic in the US court.

US court ruling

However, Judge Thomas S Zilly, US District Judge, Western District of Washington, Seattle, said: “ Respondent (Antrix) has not met its substantial burden to show that the ICC’s appointment of an arbitrator on its behalf is a ground for refusing to confirm the award. While the parties’ agreement provides that “one [arbitrator is] to be appointed by each party,” it does not address what follows when a party altogether refuses to appoint an arbitrator. The court concludes that respondent’s repeated refusal to appoint an arbitrator with respect to the ICC arbitration essentially operated as a forfeiture of its right to do so.”

Devas had filed a plea in the US court seeking enforcement of the arbitration award given by the ICC. Antrix once again questioned the jurisdiction of the US court in the case. The US court rejected Antrix’s objection stating that while foreign entities are generally “immune from the jurisdiction of the courts of the US,” there is an exception when a party seeks to confirm an arbitral award against the foreign state that is “governed by a treaty or other international agreement in force for the US calling for the recognition and enforcement of arbitral awards.”

Absence of key officials

Experts said that the defence put up by Antrix could have been stronger had it produced key officials who dealt with the case, including K Radhakrishnan, who was the Chairman of the Space Commission between 2009 and 2011, G Balachandran, then Additional Secretary, Department of Space, or Geeta Varadhan, Director of Special Projects at the Department of Space.

The Permanent Court of Arbitration (PCA) tribunal based in The Hague had also made this observation while ruling against Antrix in 2016. Balachandran had in fact suggested to contest the suit by Devas by questioning the ownership of IPR on the technology to be used by the company under the 2005 agreement with Antrix.

Antrix could have also taken cover of national security to explain the anulment of the deal but a press release issued after the Cabinet meeting in February 2011 stated that the deal was being cancelled due to “the needs of defence, para-military forces and other public utility services as well as for societal needs, and having regard to the needs of the country’s strategic requirements...”

The tribunal at Hague, in its ruling of July 25, 2016, held that the expressions “strategic needs” or “strategic requirements” covered a range of activities that went far beyond the military or paramilitary sectors or the “essential security interests” of India.

Timeline of case

January 2005 Devas Multimedia signed agreement with Antrix Corp, under which the latter agreed to build, launch, and operate two satellites and make available 70 MHz of S-band spectrum

February 2011 Antrix scrapped the deal after allegations of irregularities in the process followed

June 2011 Devas commenced arbitration proceedings in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC)

August 2011 Antrix filed a petition with the Supreme Court of India seeking to proceed under the rules and procedures of UNCITRAL

May 2013 The Supreme Court held that the proceedings initiated under ICC could not be interfered with

September 2015 A three-member ICC panel concluded that Antrix wrongfully scrapped deal and awarded Devas $562.5 million plus interest

September 2015 Devas filed plea in Delhi High Court to enforce the award

October 2016 Antrix challenged ICC award in Bengaluru court

September 2018 Devas filed plea in US court seeking enforcement of the award

October 2020 US court asked Antrix to pay the arbitration award to Devas

Published on October 30, 2020

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