US court asks ISRO's commercial arm to pay USD 1.2 bn to Bengaluru startup

A United States court has asked Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO), to pay compensation of USD 1.2 billion to a Bengaluru-based startup Devas Multimedia for cancelling a satellite deal in 2005.

The agreement was terminated by Antrix in February 2011. Over the next several years, Devas approached various legal avenues in India.
The agreement was terminated by Antrix in February 2011. Over the next several years, Devas approached various legal avenues in India. Photo courtesy: ISRO

As per the agreement in January 2005, Antrix agreed to build, launch and operate two satellites and to make available 70 MHz of S-band spectrum to Devas, which the latter planned to use to offer hybrid satellite and terrestrial communication services throughout India.

The agreement was terminated by Antrix in February 2011. Over the next several years, Devas approached various legal avenues in India. This included the Supreme Court, which directed for the suit to be brought before an international tribunal.

In its lawsuit filed in the US court in September 2018, Devas Multimedia said three separate international tribunals and nine different arbitrators have found the termination of the Devas-Antrix agreement to have been wrongful, with one of the tribunals describing it as “conduct ''which shocks, or at least surprises, a sense of juridical propriety,’” and another finding it to be “a clear breach of simple good faith” by India.

In his order dated October 27, Judge Thomas S Zilly, US District Judge, Western District of Washington, Seattle, ruled that Antrix Corporation pay compensation of USD562.5 million to Devas Multimedia Corporation and the related interest rate amounting to a total of USD1.2 billion.

Antrix had sought the dismissal of the lawsuit citing jurisdictional issues in November 2018.

The court, however, asserted that it had jurisdiction over the issue, but stayed the matter for one year and asked the two to file a joint status report by April 15, 2020.

Devas, according to submissions, has argued that the US court has jurisdiction over these cases, as Antrix engages in business in this district and across the United States.

Antrix and Spaceflight Industries, which is headquartered in Seattle, have an agreement to provide satellite launch services using India’s PSLV rocket.

Antrix and RBC Signals LLC, which is headquartered in Redmond, Washington have a worldwide agreement to provide space communications services to satellite operators.

Devas said that after the initial signing of the agreement, the two companies performed in good faith for five years.

On February 25, 2011, Antrix issued a termination notice to Devas, which among other things stated that the policy decision was of the central government, acting in its sovereign capacity in the event of force majeure, which was an occurrence on February 23, 2011.

“The scope and duration of the said decision cannot be anticipated. It is likely to be indefinite. It is not possible for Antrix to take any effective step to resume the obligations under the agreement,” Antrix said.

In June 2011, Devas commenced arbitration proceedings under the Rules of Arbitration of the International Chamber of Commerce.

Antrix initially refused to participate in the arbitration and obtained an injunction from the Indian Supreme Court enjoining the arbitration. After one year, the Supreme Court lifted the injunction, allowing the arbitration to proceed. 

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CtoI News Desk
CtoI News Desk – CtoI

Singapore-headquartered online media company targeting Indian Diaspora across Singapore, US, UK and Dubai. Connected to India covers developments around Indians abroad, informing, engaging and entertaining its audiences.

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