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US court allows Devas investors to track down ISRO commercial arm Antrix’s assets to recover $1.3 billion compensation

The US federal court has also stated that the investors can look at Antrix Corporation’s “relationships with the Government of India and NewSpace” as part of the effort to identify assets for attachment to recover the compensation.

A federal court in the United States has allowed investors in the start-up firm Devas Multimedia to identify assets of the Indian Space Research Organization’s commercial arm Antrix Corporation to attach them for recovery of a $1.3 billion compensation award made by an international arbitration tribunal over a failed 2005 satellite deal.

The US court for the western district of Washington has provided a limited amount of protection from attachment of assets as sought by Antrix Corporation in a counter to the Devas investors’ plea.

In an order passed on August 16, the US federal court has also stated that the investors can look at Antrix Corporation’s “relationships with the Government of India and NewSpace” as part of the effort to identify assets for attachment to recover the compensation.

The group of three foreign investors — CC/Devas Mauritius, Telcom Devas Mauritius and Devas Employees Mauritius Pvt Ltd, who have been allowed to intervene on behalf of Devas Multimedia on account of a move to liquidate Devas Multimedia in India by Antrix Corporation — had moved the US federal court recently for permission to discover Antrix’s assets to recover the $1.3 billion award.

Antrix had also moved the court to block the attempt by the investors to find assets of the firm and the Government of India for attachment following the International Chamber of Commerce arbitration ruling. The compensation was awarded to Devas Multimedia on September 14, 2015, following the cancellation of a deal between Devas Multimedia and Antrix to launch two communication satellites for the former to facilitate digital multimedia service on mobile and other platforms. The compensation award was confirmed by the US court for the western district of Washington on October 27, 2020.

In August 16 order, US federal judge Thomas S Zilly said, “In sum, intervenors’ motion to compel discovery is granted in part as to intervenors’ authority to obtain certain information related to respondent’s assets and asset transfers, both within and outside of the United States, and related to respondent’s relationship to the Government of India and NewSpace.”

The Devas intervenors have stated that a new commercial arm of ISRO called NewSpace India Limited was created to transfer assets of Antrix on account of attempts to enforce the $1.3 billion compensation award.

The court has asked Antrix to provide information of assets sought by intervenors by September 17. Among the specific information that the US court has allowed the Devas intervenors to seek from Antrix Corp is to “identify and describe all financial and in-kind transfers over $50,000 in each calendar year that Antrix paid to India or NewSpace on or after September 14, 2015, or to any third party on or after November 4, 2020”.

The court has also allowed the intervenors to seek access to all communications from September 14, 2015, between Antrix and a liquidator appointed by the NCLT to dissolve Devas Multimedia with respect to Antrix’s “financial assets, property, and any other assets valued at more than $50,000”.

The petitioners had approached the US court earlier this year expressing fears of Devas Multimedia entering an agreement with Antrix over the compensation payment in the wake of the ISRO unit moving to liquidate the Bengaluru headquartered firm through a liquidation plea in the NCLT. The NCLT ordered the liquidation of Devas on May 25 over alleged fraud in the creation of the firm.

The investors have also approached a Southern District of New York court with a plea to declare Air India as an alter ego of India and allow attachment of its properties in order to enforce the payment of the compensation.

The investors were awarded a $111 million compensation by a tribunal of the United Nations Commission on International Trade Law on October 13, 2020, following an arbitration process over alleged violations by the Indian government of a bi-lateral investment treaty with Mauritius.

Antrix has questioned efforts by Devas Multimedia and its investors to enforce different compensation awards made through different tribunals apart from the $1.3 billion ICC award.

“Assuming that intervenors actually recover amounts due in connection with the other award, intervenors might then be precluded from executing the full amount of this judgment to avoid double recovery, whenever that time comes. Until then, intervenors are entitled to discover respondent’s assets, as well as respondent’s relationships with the Government of India and NewSpace,” the US court stated.

Under the 2005 deal, ISRO was supposed to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia. The start-up was to provide multimedia services to mobile platforms in India using the space band or S-band spectrum transponders on ISRO’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by ISRO.

The deal was annulled by the UPA government in February 2011 amid the 2G scam crisis. After the NDA government came to power in 2014, the CBI and ED were asked to investigate the deal.

After the deal was cancelled, the investors in Devas Multimedia — the German telecom major Deutsche Telekom, the three Mauritius based foreign investors and Devas Multimedia — had approached various international tribunals seeking damages for the failed deal.

While Deutsche Telekom was awarded a compensation of $101 million plus interest by the Permanent Court of Arbitration in Geneva on May 27, 2020, the Mauritius investors were awarded a $111 million compensation (plus interest) by the United Nations Commission on International Trade Law tribunal on October 13, 2020. Devas Multimedia was also awarded a compensation of $1.3 billion by an International Chamber of Commerce tribunal on September 14, 2015.

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