Court in The Hague rejects govt plea against $111-million award to Devas investors

What’s in today’s article?

• Why in news?
• United Nations Commission on International Trade Law (UNCITRAL)
• Background - Devas-Antrix deal
• News Summary: Court in The Hague rejects govt plea against $111-million award to Devas investors
• Background of the present case

Why in news?

• The court in The Hague, Netherlands, has denied India's request to cancel a $111 million compensation given to foreign investors in an Indian satellite company called Devas Multimedia.
• This payment was awarded by a tribunal because a satellite deal from 2005 with India's ISRO’s Antrix Corporation got cancelled in 2011.

United Nations Commission on International Trade Law (UNCITRAL)

• The United Nations Commission on International Trade Law (UNCITRAL) is a subsidiary body of the United Nations General Assembly (UNGA).
• Its mandate is to further the progressive harmonization and unification of the law of international trade.
• It is the core legal body of the United Nations system in the field of international trade law.
• UNCITRAL was established by the UN General Assembly in 1996.

Background - Devas-Antrix deal

• Devas-Antrix deal
  • Antrix Corporation — the commercial arm of the ISRO – and Devas Multimedia Pvt Ltd signed an agreement in January 2005.
  • Under the deal, ISRO would lease to Devas two communication satellites (GSAT-6 and 6A) for 12 years for Rs 167 crore.
  • Devas would provide multimedia services to mobile platforms in India using S-band transponders on the satellites, with ISRO leasing 70 MHz of S-band spectrum.
• Cancellation of deal
  • The deal was annulled by the then government in February 2011, following a Cabinet Committee on Security decision.
    • The committee decided to terminate the agreement citing the requirement of the S-band spectrum for security purposes of the country.
    • Also, there were allegations that the Devas deal involved the handing over of communication spectrum valued at nearly Rs 2 lakh crore for a pittance.
  • In 2014, the CBI was asked to investigate the 2005 deal.
  • Later, The ED filed a chargesheet in 2018 under the Prevention of Money Laundering Act against a former managing director of Antrix and five Devas officials.
    • It stated that Devas transferred 85% of its Rs 579 crore foreign funding to the US under various claims.
• Devas approached various international tribunals
  • After the cancellation of the deal the foreign investors in Devas Multimedia approached various international tribunals seeking compensation.
    • These foreign investors were - the German telecom major Deutsche Telekom, three Mauritius investors, and Devas Multimedia itself.
  • As a result:
    • Devas Multimedia was awarded $1.2 billion by an International Chamber of Commerce;
    • Deutsche Telekom was awarded a $101 million compensation by the Permanent Court of Arbitration in Geneva, and
    • Mauritius investors were awarded a $111 million by UNCITRAL.
• Liquidation of Devas Multimedia and money laundering case in India
  • The National Company Law Tribunal in India ordered the liquidation of Devas Multimedia in May 2021, citing fraudulence in its creation.
  • The NCLT order was upheld by the Supreme Court of India in January 2022.
  • The Enforcement Directorate and the Central Bureau of Investigation in India are currently pursuing cases of money laundering and corruption in India against Devas and its officials.

News Summary: Court in The Hague rejects govt plea against $111-million award to Devas investors

• The court in The Hague, Netherlands, has denied India's request to cancel a $111 million compensation given to foreign investors in an Indian satellite company called Devas Multimedia.

Background of the present case

• Investors of Devas were awarded a compensation by UNCITRAL
  • In October 2020, Three Mauritius-based investors in Devas Multimedia were awarded $111 million in compensation by the United Nations Commission on International Trade Law (UNCITRAL) tribunal in The Hague.
    • These three investors were CC/Devas Mauritius Ltd, Telcom Devas Mauritius Ltd and Devas Employees Mauritius Pvt Ltd.
  • They were awarded compensation over the failed Devas-Antrix satellite deal.
• Steps taken by the Indian government
  • The Indian government approached the district court of The Hague in March 2022 for cancellation of the compensation award of 2020.
  • It cited a January 2022 Supreme Court order which upheld the liquidation of Devas Multimedia on the charge of fraud brought by the Ministry of Corporate Affairs and probe agencies CBI and ED.
• Verdict of District Court of The Hague
  • The district court rejected the government’s plea to consider the Supreme Court order as fresh evidence of wrong doing by Devas Multimedia in the process of securing the 2005 satellite deal with Antrix Corp.
  • The court decided that India's accusations of deceit, fraud, and corruption against Devas Multimedia were already addressed by The Hague's Court of Appeal.
    • India had challenged an interim arbitral award for compensation, and these accusations were part of that case.

Q1) What is Permanent Court of Arbitration?

The Permanent Court of Arbitration (PCA) is an intergovernmental organization that provides a platform for the peaceful settlement of international disputes. It was established in 1899 during The Hague's first International Peace Conference.

Q2) What is Antrix corporation limited?

Antrix Corporation Limited is a government-owned company in India that markets and promotes products and services from the Indian Space Research Organisation (ISRO). It was incorporated in September 1992 under the Companies Act of 1956. Antrix is a Public Sector Undertaking (PSU) that is wholly owned by the Government of India. It is under the administrative control of the Department of Space (DOS).

Source: Court in The Hague rejects govt plea against $111-million award to Devas investors | United Nations | The Hindu Businessline | Indian Express