A US court
has directed Indian Space Research Organisation’s commercial arm, Antrix
Corporation, to pay $1.2 billion to Bengaluru-based startup Devas Multimedia
for backing out of a satellite deal in 2005.

According
to PTI, Antrix, in January 2005, had agreed to build, launch and operate two
satellites and make a 70 MHz S-band spectrum available to Devas, which they
would use for hybrid satellite and terrestrial communication services across
India.

However, Antrix
terminated the agreement in February 2011, following which Devas sought legal
action against the firm through multiple avenues in India, including a case in the
Supreme Court.

A US
District Judge, Thomas S Zilly, of the Western District of Washington, in his
order dated October 27, directed Antrix to pay a compensation of $562.5 million,
along with various interest-related costs amounting to a total of $1.2 billion.

Devas
Multimedia said, in its lawsuit filed in September 2018, three separate international
tribunals and nine different arbitrators adjudged the termination of the agreement
to be wrongful.

They added
that one of the tribunals described it as “conduct ‘which shocks, or at least
surprises, a sense of juridical propriety,” and another found it to be a “clear
breach of simple good faith” by India.

While Antrix
sought the dismissal of the lawsuit in November 2018 citing jurisdictional
issues, the court stated it had jurisdiction and stayed the matter for a year,
asking the two parties to file a status report by April 2020.

Both Antrix and Devas filed a Joint Status Report on July 16, 2020. According to the submissions, Devas cited Antrix’s business in the United States to claim the court had jurisdiction over the case. 

Antrix and
Spaceflight Industries, which is headquartered in Seattle, have an agreement to
provide satellite launch services using India’s PSLV rocket.

Antrix and
RBC Signals LLC, which is headquartered in Redmond, Washington have a worldwide
agreement to provide space communications services to satellite operators.

In
2018, Anitrix launched a satellite for Redmond, a Washington-based Planetary Resources and agreed in 2015 to launch two satellites for Colorado-based PlanetiQ.

Antrix is also contracted with DigitalGlobe, which has headquarters in Colorado and other
locations in Florida, Virginia and Washington, to procure certain satellite
data, which is then distributed by the ISRO’s
National Remote Sensing Centre.

Devas said
that after the initial signing of the agreement, the two companies performed in
good faith for five years.

Among other things, in May 2009, Dr Appanna Bhaskarnaryana,
the Director of the Satellite Communications Programme Office of ISRO, spent
four to five weeks in the US with Devas personnel meeting with Hughes Networks,
Sirius XM SkyTerra, Qualcomm and ICO North America to understand the
technologies used by, and operation of, hybrid satellite-terrestrial operators
providing telecommunications services.

Devas
subsequently conducted experimental trials in India (attended by Antrix
officials, including the company’s then chairman), Chengdu and Beijing in China,
and Stuttgart in Germany, which successfully demonstrated the hybrid
satellite-terrestrial systems and end-user terminals that Devas had developed
in conjunction with a global network of leading technology players such as
Alcatel Lucent, it said.

On February
25, 2011, Antrix issued a termination notice to Devas, which among other things
stated that the policy decision was of the central government, acting in its
sovereign capacity is the event of force majeure, which was an occurrence on
February 23, 2011.

“The scope
and duration of the said decision cannot be anticipated. It is likely to be
indefinite. It is not possible for Antrix to take any effective step to resume
the obligations under the agreement,” Antrix said.

Devas
disputed Antrix’s repudiation of the agreement and sought to conduct
discussions among senior management as contemplated by that agreement.

In June
2011, Devas commenced arbitration proceedings under the Rules of Arbitration of
the International Chamber of Commerce.

Antrix
initially refused to participate in the arbitration and obtained an injunction
from the Indian Supreme Court enjoining the arbitration.

After one year, the
Supreme Court lifted the injunction, allowing the arbitration to proceed.
Thereafter, Antrix participated fully in the arbitration.