New Delhi: Antrix Corporation Ltd, the commercial arm of the Indian Space Research Organisation (Isro), said on Wednesday it will appeal against an international tribunal’s verdict ordering it to pay $672 million to Devas Multimedia Pvt. Ltd for cancelling a contract four years ago on grounds of national security.
The ruling by the International Court of Arbitration of the International Chamber of Commerce “is shocking," a spokesperson for Isro said.
“Antrix, with the support of Department of Space, is preparing to file in court its application for remedy," the spokesperson said. He declined to give further details.
On Tuesday, the Paris-based International Court of Arbitration awarded Devas, a Bengaluru-based space technology firm, $562.5 million in damages, and additional interest, for cancelling a contract four years ago on grounds of national security.
The ruling is a setback to Isro and the government, although the penalty is far short of the $1.6 billion Devas had sought in damages. That calculation included the value of its business, interest and costs, in the arbitration proceedings it initiated against Antrix Corporation.
The total award includes interest (at the London inter-bank offered rate, or Libor, +4%) from 25 February 2011, making it $672 million. In addition, the tribunal also said that as of 14 September 2015, Antrix is also liable to pay a post-award simple interest at 18% per annum (on $672 million) till the full award is paid.
“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," Devas said in a statement, on Tuesday.
“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."
Antrix, on its part, argued that damages were limited by contract to $15 million in fees that Devas had paid to Antrix. The two organizations did work together to build and test the satellites in the five years between signing the contract and its eventual annulment.
The ruling relates to a 28 January 2005 agreement between Devas and Antrix, under which Devas was to lease as much as 70 megahertz (MHz) of S-band spectrum from two satellites that were to be launched by Isro.
As part of the deal, Devas was to pay Antrix around $300 million for the right to use the spectrum for 12 years, extendable by an additional 12 years. Devas intended to use the spectrum to provide audio, video and broadband services using a mix of satellite and terrestrial technology.
The Cabinet Committee on Security called off the deal in 2011 after questions arose on whether the procedure followed by Antrix to allocate the airwaves was the most economically favourable option for the exchequer.
The scrapping of the deal was seen as a fallout of the November 2010 report by the Comptroller and Auditor General of India that fuelled what is now commonly referred to as the 2G spectrum scam. The report alleged that a flawed 2G spectrum allocation process followed by the then United Progressive Alliance government had led to a ₹ 1.76 trillion loss (in notional terms) to the exchequer.