Yet Another Arbitration, Yet Another Win for Devas
Yet Another Arbitration, Yet Another Win for Devas
On Tuesday, the Permanent Court of Arbitration (PCA) at the Hague ruled against the Indian government over the cancellation of a contract between Devas Multimedia and Antrix, the commercial arm of the state-run Indian Space and Research Organisation. This ruling could cost India some serious money in damages.
This is the second ruling in favour of Devas by an international tribunal arising out of the cancellation of the Devas-Antrix contract.
In 2015, an International Chamber of Commerce (ICC) tribunal found that Antrix’s repudiation of the Devas-Antrix contract was unlawful, and had awarded Devas damages and pre-award interest to the tune of $672 million, plus post-award annual interest accruing at 18 percent until the award was paid in full. According to Devas, courts in the United Kingdom and France have recognised the ICC award and held that it is enforceable.
“This most recent arbitration is with respect to our Mauritian shareholders, whose owners Columbia Capital and Telecom Ventures have concluded the first phase of the arbitration at Hague in the PCA. We were very pleased to see the award in their favour as well,” Ramachandran Viswanathan, the President and CEO of Devas Multimedia told BloombergQuint in a telephonic interview.
With the liability established in the first phase of arbitration, the quantum of damages to be paid to Devas will be quantified in the second phase, Vishwanathan added.
Devas’ foreign investors separately brought claims against the Republic of India under two separate bilateral investment treaties (BITs) – the Mauritius-India BIT and the Germany-India BIT. They alleged that India violated its treaty obligations with regard to their investments in Devas. The claimants in the Mauritius-India Bilateral Investment Treaty Case are CC/Devas (Mauritius) Ltd, Devas Employees Mauritius Pvt Ltd., and Telecom Devas Mauritius Ltd. CC/Devas and Telcom Devas are owned by two U.S. venture capital firms, Columbia Capital and Telecom Ventures respectively.
In an award issued on July 25, 2016, the Permanent Court of Arbitration found that when the Indian government cancelled the Devas-Antrix agreement, it constituted an act of expropriation and that in doing so, it also denied foreign investors ‘fair and equitable treatment’ under the treaty.
The tribunal in the German-Indian Bilateral Investment Treaty case has already completed a jurisdictional and merits hearing in May 2016. This is with respect to a parallel claim that German shareholders are pursuing in the same case. That tribunal is expected to pass an award soon as well.
“The decision by the tribunal under the Germany-India BIT is still an open decision. There could be potential for even a third award against the Indian government in this issue,” said Lawrence Babbio, chairman at Devas Multimedia.
On Wednesday, the ISRO chief, AS Kiran Kumar, told BloombergQuint that India will appeal against the Permanent Court of Arbitration’s verdict at The Hague.