CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Limited, and Telcom Devas Mauritius Limited v. Republic of India - PCA Case No 2013-09 - Award on Jurisdiction and Merits - 25 July 2016
Country
Year
2016
Summary
TABLE OF CONTENTS
CHAPTER I - INTRODUCTION
A. THE PARTIES
B. THE DISPUTE
CHAPTER II - PROCEDURAL HISTORY
A. COMMENCEMENT OF THIS ARBITRATION
B. CONSTITUTION OF THE ARBITRAL TRIBUNAL
C. ADOPTION OF THE TERMS OF APPOINTMENT AND THE FIRST PROCEDURAL MEETING
D. CHALLENGES TO THE APPOINTMENT OF ARBITRATORS
E. THE PARTIES' WRITTEN SUBMISSIONS
F. THE PARTIES' REQUESTS FOR THE PRODUCTION OF DOCUMENTS
G. HEARING ON JURISDICTION AND LIABILITY
H. THE NEW DOCUMENTS PRODUCED BY THE RESPONDENT ON DECEMBER 20, 2014
I. THE LAUNCHING OF GSAT-6
J. THE ICC FINAL AWARD IN DEVAS MULTIMEDIA PRIVATE LIMITED V. ANTRIX CORPORATION LIMITED
CHAPTER III - FACTUAL BACKGROUND
A. THE KEY ACTORS - CORPORATE AND STATE ENTITIES AND ORGANS OF THE STATE
B. BACKGROUND TO THE DEVAS PROJECT
1. The S-band and Its Allocation within India
2. The Proposed Devas Satellite-Terrestrial Communications System
3. Negotiations Leading to the Devas Agreement
C. THE DEVAS AGREEMENT
1. Leased Capacity
2. Upfront Capacity Reservation Fees
3. Regulatory Approvals
4. Delay Damages
5. Termination
6. Force Majeure
D. THE INITIAL DEVELOPMENT OF THE DEVAS PROJECT
1. Establishment of Corporate Infrastructure and Initial Financing
2. Delays to the Delivery of Satellites
E. THE PARALLEL REVIEW PROCESS OF THE DEVAS AGREEMENT AND ITS SUBSEQUENT ANNULMENT
1. Indias Internal Discussions on Security Needs for S-band Capacity
2. The Suresh Report
3. The Space Commission's Determination to Annul the Devas Agreement
4. The Opinion of the Additional Solicitor-General
5. DOS' Note for the CCS and the CCS' Decision to Annul the Devas Agreement
F. THE PERIOD FOLLOWING THE ANNULMENT OF THE DEVAS AGREEMENT
1. Initial Reactions of Devas and Antrix to the Annulment of the Devas Agreement
2. The Satellites
3. Related Arbitration Proceedings
CHAPTER IV - REQUESTS FOR RELIEF
CHAPTER V - THE MEANING OF "INVESTMENT" FOR THE PURPOSES OF THE TREATY
A. THE PARTIES' ARGUMENTS
1. The Respondent's Position
2. The Claimants' Position
B. THE TRIBUNAL'S ANALYSIS
1. The Devas Agreement
2. Investment Under the Treaty
CHAPTER VI - THE "ESSENTIAL SECURITY INTERESTS" PROVISION
A. INTERPRETATION OF ARTICLE 11(3) OF THE TREATY IN CONTEXT
1. What Constitutes "Essential Security Interests"?
a. Can "Essential Security Interests" Be Construed as a Matter of Self-judgment by the Respondent?
i. The Respondent's Position
ii. The Claimants' Position
iii. The Tribunal's Analysis
b. What Conditions Must the Respondent Meet to Show that its Measures Were "Directed to the Protection of its Essential Security Interests"?
i. The Respondent's Position
ii. The Claimants' Position
iii. The Tribunal's Analysis
2. Does Article 11(1) of the Treaty Allow for the Introduction of Customary International Law Restrictions Imposed on a State of Necessity Defence?
a. The Claimants' Position
b. The Respondent's Position
c. The Tribunal's Analysis
3. Can the Claimants Invoke Article 11(4) of the Treaty?
a. The Claimants' Position
b. The Respondent's Position
c. The Tribunal's Analysis
4. Does Article 11(3) Prevent Entitlement to Compensation?
a. The Claimants' Position
b. The Respondent's Position
c. The Tribunal's Analysis
B. APPLICATION OF THE LAW TO THE FACTS
1. The Parties' Arguments
a. Historical Analysis of Demands for S-band Spectrum in India
i. The Claimants' Position
ii. The Respondent's Position
b. MSS Demands Versus BSS Demands
i. The Claimants' Position
ii. The Respondent's Position
2. The Tribunal's Analysis
CHAPTER VII - EXPROPRIATION
A. THE PARTIES' ARGUMENTS
1. The Existence of an Expropriation
a. The Claimants' Position
b. The Respondent's Position
2. Lawfulness of the Expropriation
a. Public Purpose
i. The Claimants' Position
ii. The Responnddeenntt's Position
b. Due Process
i. The Claimants' Position
ii. The Responnddeenntt's Position
3. Potential Discrimination in the Expropriation
a. The Claimants' Position
b. The Respondent's Position
4. Fair and Equitable Compensation
a. The Claimants' Position
b. The Respondent's Position
5. The Pendency of a Breach of Contract Claim
a. The Claimants' Position
b. The Respondent's Position
B. THE TRIBUNAL'S ANALYSIS
1. The Existence of an Expropriation
2. The Lawfulness of the Expropriation
a. Public Purpose
b. Due Process
c. Potential Discrimination in the Expropriation
d. Fair and Equitable Compensation
e. The Pendency of a Breach of Contract Claim
3. Conclusion
CHAPTER VIII - FAIR AND EQUITABLE TREATMENT
A. THE PARTIES' ARGUMENTS
1. The Applicable Standard of Treatment
a. The Claimants' Position
b. The Respondent's Position
2. The Alleged Violation of the FET Standard
a. The Claimants' Position
b. The Respondent's Position
B. THE TRIBUNAL'S ANALYSIS
CHAPTER IX - UNREASONABLE OR DISCRIMINATORY MEASURES
A. THE PARTIES' ARGUMENTS
1. The Claimants' Position
2. The Respondent's Position
B. THE TRIBUNAL'S ANALYSIS
CHAPTER X - MOST-FAVOURED-NATION TREATMENT
A. THE PARTIES' ARGUMENTS
1. The Possibility of Importing the 'Full Legal Protection and Security' Clause of the
Serbia-India BIT
a. The Claimants' Position
b. The Respondent's Position
2. The Respondent's Alleged Violation of the 'Full Legal Protection and Security' Provision
a. The Claimants' Position
b. The Respondent's Position
B. THE TRIBUNAL'S ANALYSIS
CHAPTER XI - DECISIONS
...
B. THE DISPUTE
5. The dispute concerns the annulment of a contract, entitled Agreement for the Lease of Space Segment Capacity on ISRO/ANTRIX S-Band Spacecraft (the "Devas Agreement" or the "Agreement"),1 concluded on January 28, 2005 between Devas Multimedia Private Limited ("Devas"), an Indian company, and Antrix Corporation Limited ("Antrix"), an Indian State- owned company. The annulment of the Devas Agreement followed a policy decision taken by the Government of India to reserve a part of the electromagnetic spectrum known as the S-band "for national needs, including for the needs of defence, para-military forces, railways and other public utility services as well as for societal needs, and having regard to the needs of the counttrryy's strategic requirements."22 Part of that spectrum had originally had been leased to Devas under the Devas Agreement for the purpose of offering broadband wireless access and audio-video services throughout India.
6. The Claimants, who are shareholders of Devas, maintain that this policy decision taken by the Government of India amounted to an expropriation of the Claimants' investments in India and was not accompanied by payment of fair and equitable compensation, in breach of the Treaty.
They also allege other breaches under Articles 3 and 4 of the Treaty.
7. The Respondent argues that its policy decision was intended to satisfy the national security needs of the nation; that Devas had no right to proceed with the Devas Agreement uninterrupted by any governmental action; and that the Claimants have no claim under the Treaty.
...
CHAPTER XI - DECISIONS
501. For the reasons set out above, the Tribunal decides and awards as follows:
(a) Unanimously, that the Claimants' claims relate to an "investment" protected under the Treaty;
(b) Unanimously, that the notice of termination of the Devas Agreement sent by Antrix to Devas constituted an act of State attributable to the Respondent.
(c) By majority, that the Tribunal lacks jurisdiction over the Claimants' claims in sofar as the Respondent's decision to annul the Devas Agreement was in part directed to the protection of the Respondent's essential security interests;
(d) By majority, that the Respondent has expropriated the Claimants' investment insofar as the Respondent's decision to annul the Devas Agreement was in part motivated by considerations other than the protection of the Respondent's essential security interests;
(e) By majority, that the protection of essential security interests accounts for 60% of the Respondent's decision to annul the Devas Agreement, and that the compensation owed by the Respondent to the Claimants for the expropriation of their investment shall therefore be limited to 40% of the value of that investment;
(f) Unanimously, that the Respondent has breached its obligation to accord fair and equitable treatment to the Claimants between July 2, 2010 and February 17, 2011.
(g) Unanimously, that the Claimants' other claims shall be dismissed;
(h) Unanimously, that any decision regarding the quantification of compensation or damages, as well as any decision regarding the allocation of the costs of arbitration, shall be reserved for a later stage of the proceedings.
Footnotes omitted