Devas investors move The Hague against Antrix
Investors companies of Devas have moved the Permanent Court of Arbitration (PCA) in The Hague (Netherlands) against Antrix Corporation — the Indian Space Research Organisation’s (ISRO) commercial arm. The Court has formed a panel to hear the multi-million dollar claim slapped by Devas Multimedia and its U.S. associates (who invested in the deal through foreign direct investment routed via Mauritius) against the Government of India following the cancellation of the deal for the launch of two satellites and the allocation of S-band spectrum to Devas.
What is the issue?
In 2005, Devas and Antrix had struck a deal which had provided for the launch of two satellites allowing Devas to establish a hybrid satellite and terrestrial communications network to supply wireless audio-visual, broadband and mobile internet service across India. But later, Antrix terminated the contract citing changes in Indian policy and that the allocation of S-band Spectrum to companies unconnected with India’s space programme was now regarded as a risk to national security. As per Antrix , the change in policy constituted a “force majeure” event (inevitable event or act of God). But Devas countered this argument of Antrix contending that the national security and force majeure issues are “contrived excuses”.
Devas seeks damages amounting to $ 1.6 billion under the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules. The case is against the Government of India as it has been hauled as parent of Antrix and DoS, into the international arbitration citing breach of BIPA (Bilateral Investment Protection & Promotion Agreement) signed with Mauritius. The Mauritius-based firms filed for arbitration in July 2012 under the Mauritius-India Bilateral Investment Treaty following the cancellation of the contract.
Who is on the arbitration panel of Justices at Hague?
- The Hague arbitration panel will be chaired by Canada’s Marc Lalonde QC and will comprise Francisco Orrego of Chile and former Rajasthan High Court Chief Justice Anil Dev Singh.
What is BIPA?
In order to encourage foreign capital flows and provide safe business environment for their own investors abroad, many countries are signing investment treaties or agreements. Bilateral Investment Promotion and Protection Agreement (BIPA) is one such bilateral pact which is defined as an agreement b/w two countries (or States) for the reciprocal encouragement, promotion and protection of investments in each other’s territories by the companies based in either country (or State).
Purpose: To create such conditions which are favorable for fostering greater investments by the investors of one country in the territory of the other country. Such agreements are beneficial for both the countries because they energize their business initiatives and thus enhance their prosperity.
BIPA provides a legal basis for enforcing the rights of the investors in the countries involved. They give assurance to the investors that their foreign investments will be guaranteed fair and equitable treatment, full and constant legal security and dispute resolution through international mechanism.
Month: Current Affairs - May, 2013