Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
prelims Test Series 2019
बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
India May have to Pay $ 1 Billion in Antrix Case
Jul 28, 2016

India has lost a major case in international arbitration involving spectrum and satellites and may have to pay up to a billion dollars in damages. This verdict from the International Tribunal at The Hague could further the perception of India as an unreliable recipient of foreign investment, one who is prone to abrupt policy changes.

  • The Permanent Court of  Arbitration (PCA) tribunal at The Hague has found that the government’s actions in cancelling the contract between Devas and Antrix Corporation and denying Devas commercial use of S-band satellite spectrum constituted an “expropriation”.
  • Expropriation is the act of a government in taking privately-owned property, presumably for public benefit. Reports said the government will have to pay about Rs 6,700 crore as damages for arbitrarily annulling the contract in 2011.
  • The PCA tribunal also found that India breached its treaty commitments to accord fair and equitable treatment to Devas’s foreign investors.
  • The ruling could have a bearing on other Indian government decisions that private companies have contested.
  • British telecom giant Vodafone is engaged in an international arbitration with India on a case of retrospective taxation under a bilateral investment treaty. Vodafone’s repeated run-ins with taxmen had stoked fears about the country’s high-handedness in dealing with foreign investors.
  • In 2012, India changed laws to impose taxes on older corporate deals such as British telecom giant Vodafone’s acquisition of Hutchison Whampoa’s telecom assets in India.
  • Bangalore-headquartered Devas Multimedia was founded by former ISRO scientists and counts Deutsche Telekom, Columbia Capital and Telecom Ventures among its lot of foreign investors.
  • Devas and Antrix entered into an agreement in 2005 under which Antrix committed to manufacturing, building, launching and operating two ISRO satellites and to leasing the associated 70 MHz of S-band satellite spectrum to Devas for a period of 12 years.
  • In 2011, the Comptroller and Auditor General (CAG) said there were potentially a number of irregularities in the agreement including conflict of interest, and violation of standard operating procedures.
  • ISRO annulled the agreement shortly after the leaked report came out.
  • In September 2015, the International Court of Arbitration (ICA) of the International Chamber of Commerce unanimously ruled in Devas’s favour and held Antrix liable for unlawfully terminating the contract.
  • ICC also directed Antrix to pay $672 million (Rs.4,435.20 crore) in damages to Devas Multimedia. Antrix then approached the PCA for a favourable verdict.
  • With this PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas’s rights.
  • The case in the Hague was filed against the government of India by Devas Multimedia, a telecom firm based in Bengaluru with a roster of US investors.
  • In 2005, Devas was told it could use valuable S-band spectrum by leasing space on two Indian satellites.
  • The deal with Devas was struck by Antrix, which the commercial branch of the state-run Indian Space and Research Organisation or ISRO. Antrix is meant to monetise a selection of ISRO services by offering them to private firms.
  • Devas planned to use the leased satellite transponders and spectrum to provide broadband and multi-media services across the country including in remote areas. Antrix agreed that the satellites needed would be built by ISRO.
  • Antrix was to be paid nearly 600 crores over 12 years. But in 2011, the contract was cancelled.  The government of Dr Manmohan Singh said that it had not signed off on ISRO's plans to build the satellites.
  • Antrix was also charged with not following a bidding process in allocating the satellite space and spectrum to Devas.

Antrix Corporation Limited

Antrix Corporation Limited (Antrix), incorporated on 28 September 1992 (under the Companies Act, 1956), is a wholly owned Government of India Company under the administrative control of Department of Space (DOS).

  • Antrix is the commercial arm of Indian Space Research Organisation (ISRO).
  • Antrix promotes and commercially markets the products and services emanating from the Indian Space Programme.
  • In the year 2008, the Company was awarded ‘MINIRATNA’ status.

Current Business Activities of Antrix

  • Provisioning of communication satellite transponders to various users
  • Providing launch services for customer satellites
  • Marketing of data from Indian and foreign remote sensing satellites
  • Building and marketing of satellites as well as satellite sub-systems
  • Establishing ground infrastructure for space applications
  • Mission support services for satellites

Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.