US court lift stay on lawsuit by Devas seeking compoensation from Antrix

A US court has lifted a stay on proceedings of a lawsuit filed by Bengaluru-based start-up Devas Multimedia, seeking a compensation of over USD one billion

from the Indian Space Research Organisation's (ISRO) commercial arm Antrix Corporation for cancelling a satellite deal in 2011.

In his order dated September 17, Judge Thomas S Zilly from the US District Court, Western District of Washington lifted the stay on the proceedings of the lawsuit filed by Devas against Antrix.

The court has scheduled October 14 as the next date of hearing by Zoom, a virtual meeting platform, to determine whether Devas' lawsuit against Antrix be granted to proceed ahead or denied.

In 2005, Devas Multimedia Pvt Ltd had entered into an agreement for the lease of space segment capacity on Antrix S-Band Spacecraft.

According to the agreement, 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 communications services throughout India.

In February 2011, Antrix terminated the agreement. Over the next several years Devas approached various legal avenues in India. This included Supreme Court, which directed for a tribunal.

The tribunal, in New Delhi, in its order dated September 14, 2015 concluded that Antrix wrongfully repudiated the Devas-Antrix Agreement.

The tribunal also asked Antrix to pay USD 562.5 million to Devas for damages caused by Antrix's unlawful repudiation of the agreement, along with pre and post award interest rates, which crossed the compensation to more than USD one billion.

In its lawsuit filed in the US court in September 2018, Devas said that 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 a 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.

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

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.

On July 16, 2020, both Devas and Antrix filed the instant motion, a joint status report, in which they disputed whether the court should lift or extend the stay, and, if the latter, whether Antrix be required to post security.

Judge Zilly in his order noted that more than five years have passed since the Tribunal Award was issued, and nearly ten years have passed since the contract dispute arose.

Likewise, since the stay was entered more than one year ago, there have been no new developments in the Indian courts on the jurisdictional issue or on the merits of the proceedings, he said.

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

Antrix in its submissions asserted that this case involves a purely foreign dispute with no connection to the US.

Both parties are Indian corporations. The underlying contract was governed by Indian law and called for performance in India. All of the events giving rise to the dispute occurred in India, and the resulting arbitration was seated in India, it said.

Antrix has no offices, employees, bank accounts or agents in the US. Antrix's few sporadic business dealings with US companies are completely irrelevant to this case and cannot support the exercise of jurisdiction over Antrix, it asserted and sought dismissal of the court case.

Antrix asserted that as per the agreement of January 28, 2005, it agreed to build, launch and operate two satellites and lease certain S-Band spectrum frequencies to Devas.

In exchange, Devas agreed to pay certain Upfront Capacity Reservation Fees and annual fees ranging from USD nine million to USD 11.25 million. The implementation of the agreement was subject to obtaining various government and regulatory approvals and clearances, it said.

Under the agreement, Antrix could terminate the deal if it was unable to obtain the necessary satellite orbital slots. In the event of an early termination, the agreement limited Antrix's liability to reimbursement of any Upfront Capacity Reservation Fees already paid by Devas as of the date of termination, it asserted.

Noting that the agreement provided Devas with a lease on approximately 37 per cent of the total S-Band spectrum allocated to India by the ITU, Antrix told the US court that implementation of the agreement was essentially doomed from the start given the competing and growing requirements of the Indian government to use the nation's limited S-Band spectrum for military and national security purposes.

Antrix told the court that the termination of the agreement was based on decision of Cabinet Committee on Security on February 17, 2011.

The Cabinet Committee on Security concluded that, because of the growing need for S-Band spectrum for military, national security and other societal uses, the Indian government would not provide Antrix with an orbital slot for commercial activities.

In view of this conclusion, the Cabinet Committee on Security decided that the agreement should be annulled, it told the US court.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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