Cancelled satellite deal with Devas to cost Isro $1bn

In what could be a heavy loss for India's low-cost space exploration programme, the International Court of Arbitration in The Hague has asked the Antrix Corporation, the commercial arm of Indian Space Research Organisation (Isro), to pay $1 billion in damages to Devas Multimedia Pvt Ltd for cancelling a satellite leasing deal in 2010.

Under the deal entered into in 2005, Antrix had committed to manufacture, build, launch and operate two Isro satellites and lease the associated 70 MHz of S-band spectrum to Devas for a period of 12 years, with an option for Devas to renew the agreement for another 12 years.

Under the deal, signed in 2005 when G Madhavan Nair was at the helm of affairs in the Department of Space, Antirx was to receive an upfront capacity reservation fees of $20 million per satellite and lease fees of $9 million to $11.24 million once the satellites were operational.

As per the agreement, Antrix was to provide 70 MHz of the scarce S-band space segment, involving 90 per cent of the transponders in the satellites GSAT-6 and  GSAT-6A to Devas for its digital multimedia services.

In 2009, Antrix terminated the agreement citing security reasons, following which, Devas sought relief through arbitration.

The then Manmohan Singh-led UPA government in 2011 said the project was under review and action has been initiated for termination of the contract.

The government's Cabinet Committee on Security finally cancelled the deal on 17 February 2011. Devas then took Antrix and the government to International Court for cancelling its contract, claiming $1.6 billion in damages.

The arbitration proceeding began in June 2013.

While Devas was to pay Antrix $300 million over a 12-year period, the satellites were to be launched by Isro. Against this, Antrix will now have to pay Dvas $1 billion in damages.

The tribunal (Permanent Court of Arbitration (PCA)) also found that India breached its treaty commitments to accord fair and equitable treatment to Devas's foreign investors, Devas said in a statement.

In September, two other courts - the International Court of Arbitration (ICA) of the International Chamber of Commerce - had unanimously ruled in Devas's favour and found Antrix Corp liable for unlawfully terminating the Devas-Antrix agreement in 2011.

ICC had directed Antrix to pay $672 million (Rs4,435.20 crore) in damages to Devas Multimedia.

In 2015, Devas filed its case at the International Court of Arbitration, which found that the Indian government had acted unfairly, causing huge losses to the investors in Devas Multimedia.

Former ISRO chairman G Madhavan Nair was questioned by the CBI in May this year in relation to the case. The deal also cost Nair the ISRO chairmanship since he was the head of Antrix governing council when the deal was finalised in January 2005.

The Enforcement Directorate last month issued a notice to Devas Multimedia Private Ltd for violation of foreign exchange laws to the tune of around Rs1,200 crore.

''Devas committed to partner with Antrix on a hybrid satellite-terrestrial infrastructure project to bring nationwide satellite/terrestrial broadband wireless access and audio visual services to India. With today's PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas's rights,'' Devas chairman Lawrence T Babbio said in the statement.

''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,'' Babbio added.

Devas said in a statement on its website, ''Devas Multimedia and its shareholders, including highly regarded international investors, are pleased that the ICC Tribunal unanimously ruled in its favor and found that Antrix is liable for unlawfully terminating the Devas-Antrix Agreement in February 2011. The ICC Tribunal also awarded damages and pre-award interest totaling USD $672 million to Devas with post-award interest accruing at 18% per annum on that sum until the award is fully paid. 

''Devas is hopeful that Antrix will now live up to its legal obligations and pay the award so that this dispute that arose during the prior government can be brought to a swift close.'''