Antrix-devas deal: German telco moves US court against govt, flags unpaid damages

Deutsche Telekom, which picked up a 19.62 per cent stake in Devas Multimedia filed the petition for confirmation of damages in a US federal court in the district of Columbia.

German telecom company Deutsche Telekom, an investor in Indian firm Devas Multimedia Pvt Ltd, has filed a petition in a US court against the Indian government seeking confirmation of a $135-million compensation payment to it.

The compensation, which includes interest, was awarded by a Permanent Court of Arbitration in Geneva last year over the 2011 annulment of a satellite deal between Devas and the Indian Space Research Organization’s commercial arm, Antrix Corporation.

Deutsche Telekom, which picked up a 19.62 per cent stake in Devas Multimedia filed the petition for confirmation of damages in a US federal court in the district of Columbia.

The US court issued summons to the Republic of India on April 20 based on the petition filed by Deutsche Telekom for confirmation of the PCA Geneva court order of May 27, 2020.

“India has refused to pay the amounts due under the final award and interest has continued to accrue on the amounts awarded to petitioner… such that the total amount owed by India as of the date of the filing of this petition is USD 135,829,857, on which interest continues to accrue ‘until paid in full’ as required by the final award,” Deutsche Telekom has stated in the petition, available in the public domain and seen by The Indian Express.

Deutsche Telekom picked up the stake in Devas Multimedia Pvt Ltd, floated by ex-ISRO and satellite radio executives from the US, with a total investment of $99.2 million between 2008 and 2009 after Devas Multimedia was promised communication satellites by ISRO’s commercial arm Antrix Corp to provide broadband and multimedia services.

The 2005 agreement between Devas and Antrix was cancelled by the UPA government In February 2011, over “security reasons” — amid the raging 2G scandal.

After the cancellation of the deal, Deutsche Telekom, three Mauritius-based foreign investors in Devas Multimedia, and Devas Multimedia itself approached various international arbitration tribunals seeking damages for the failed deal.

While Deutsche Telekom was awarded compensation of $101 million plus interest by the Permanent Court of Arbitration in Geneva on May 27, 2020, the Mauritius investors were awarded $111 million compensation by the United Nations Commission on International Trade Law tribunal on October 13, 2020. Devas Multimedia was awarded compensation of $1.3 billion by an International Chamber of Commerce tribunal on September 14, 2017.

The $1.3-billion compensation to Devas was confirmed by the US federal court for the western district of Washington on October 27, 2020. Antrix Corporation has gone in appeal to a US court against this order and the Supreme Court of India asked for the ICC tribunal award to be kept in abeyance through a November 4, 2020 order.

Antrix Corporation has meanwhile initiated proceedings on the directions of the government of India to liquidate Devas Multimedia alleging that the firm was a sham entity. The matter is currently in the Karnataka High Court on account of an investor in Devas questioning the move to liquidate Devas Multimedia.

Earlier this year in January, the three Mauritius based entities CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Pvt Ltd, and Telcom Devas Mauritius Limited, who held a 37.5 percent stake in Devas Multimedia, sought confirmation of the UNCITRAL order in the US Columbia district court.

The US court issued summons in the matter to Indian authorities on May 13 this year. The Mauritius investors have also reportedly issued a notice to the government of India initiating a claim on behalf of the foreign investors for payment of the $ 1.3 billion compensation awarded to Devas Multimedia and confirmed by a US federal court.

The German telecom firm Deutsche Telekom has said in its petition in the US district of Columbia court that the Indian government had violated a bilateral investment treaty between Germany and India signed on July 10, 1995 for Promotion and Protection of Investments with the cancellation of the Devas- Antrix deal in February 2011.

“India did not seek to set-aside the final award, and the 30-day deadline for it to do so under Swiss law has long passed. On August 20, 2020, the Civil Court for the Republic and Canton of Geneva certified that the Final Award was enforceable,” says the Deutsche Telekom plea

The German firm has cited the verdict of the PCA Geneva tribunal and said that the Devas Antrix deal was cancelled in the light of the 2G scandal in 2011 although Deutsche Telekom was not linked to the scandal.

“Devas was looking for a “strategic investor” with experience in the industry and know-how to help it build its business. Petitioner, for its part, was looking to invest in early-stage players in emerging markets to which it could add value through its expertise in planning and designing terrestrial networks,” the German firm has said of its investment in Devas.

“After conducting due diligence, on March 19, 2008, petitioner agreed to provide through its Singaporean subsidiary a USD 75 million equity contribution in exchange for 17.2% of the shares of Devas. The following year, on September 29, 2009, petitioner made a further equity contribution in Devas of USD 22.2 million and increased its shareholding,” the firm has stated.

“India was fully aware of petitioner’s investment, as its Foreign Investment Protection Board and Department of Telecommunications (“DOT”) sent five letters to Devas (in August 2008, September 2009, and January 2010) approving petitioner’s indirect equity participation in the company,” Deutsche Telekom has stated.

“On February 2, 2011, the former Minister of Telecommunications and two other officials were arrested in connection with the 2G scandal. This arrest triggered criticism from the opposition, including in connection with the government’s allocation of the S-band spectrum to Devas,” the German firm has said in its plea in the US court.

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 firm 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.

After the NDA government came to power in 2014 the CBI was asked to investigate the 2005 deal between Devas and Antrix.

In August 2016 the CBI filed a chargesheet against eight officials from Devas, ISRO and Antrix linked to the 2005 deal for “being party to a criminal conspiracy with an intent to cause undue gain to themselves or others by abusing official positions”. Among the eight persons chargesheeted by the CBI in the case is the former ISRO chairman G Madhavan Nair.

The CBI has accused former ISRO officials and Devas of causing a loss of approximately Rs. 578 crore to the Indian government through the 2005 deal. The Directorate of Enforcement (ED) of the ministry of finance has filed a charge sheet under the Prevention of Money Laundering Act against a former managing director of Antrix Corporation and five Devas officials.

The ED has stated that Devas Multimedia transferred 85 per cent of the Rs 579 crore foreign funding it received on the back of the 2005 ISRO deal to the US under various claims.

The Devas investors have however claimed that the Indian government has been engaged in retaliatory action against the firm over the compensation claims. The “retaliatory campaign – including the release of disinformation falsely designed to make it look as if there are bona fide investigations into the petitioners – is likely to intensify in light of the quantum award,” says the petition filed by the Mauritius based investors in the US court in January.

Some of the founders of Devas Multimedia are incidentally attempting to deploy satellite technology – associated earlier with the Devas venture – for 5G telecom rollout in the US.

Omnispace LLC, a satellite communications start up in the US, which has Devas Multimedia Pvt Ltd founder and CEO Ramachandran Viswanathan as its president and CEO announced in February this year that the firm would be putting together a constellation of satellites to power 5G from space – to provide connectivity to remote areas.

Omnispace which was launched in 2012 in the US – shortly after the Devas Multimedia satellite deal with ISRO’s Antrix Corporation was scrapped by the Indian government – currently has an unused satellite, F2, from a private UK firm and has signed deals for the manufacture and launch of two more satellites.

The F2, a middle earth orbit satellite which has been unused since launch in 2001 by the UK firm ICO Global Communications – which had the Indian firm VSNL as an investor in the 1990s (prior to the purchase of VSNL by Tata Communications) – is already located in space.

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