|Second Antrix blow, Hague tribunal rules against govt, damages case to start|
|Wednesday, 27 July 2016 05:54|
The government suffered its second blow in the Antrix-Devas satellite deal that was cancelled in February 2011, with an arbitration tribunal of the Permanent Court of Arbitration (PCA) ruling that the government’s decision to get ISRO-arm Antrix to terminate its agreement constituted an act of expropriation, according to a release issued by Devas Multimedia Private Limited on Tuesday. The first arbitral award by the International Chamber of Commerce’s (ICC) arbitral arm, in September 2015, was for $672mn – the case is in a local court with Antrix challenging the award and Devas asking for the award to be executed.
While hearings on the quantum of damages are to start soon at the PCA, now that the case of expropriation has been settled, a third case of damages is also pending arbitration.
The ICC case was filed by Devas against Antrix while the PCA case has been filed by Devas’ shareholders that include US investors Columbia Capital and Telecom Ventures – since the firm was based out of Mauritius, the case was filed under the Indo-Mauritius bilateral investment treaty (BIT) and is against the Government of India. Another case, by Deutsche Telekom which is another investor in the consortium is also pending at PCA.
Meanwhile, since there are several cases filed against the government, including those by Vodafone and Cairn on the retrospective tax legislation, the government has come out with a new BIT that excludes taxation cases – cases like Antrix-Devas will, however, still be covered by the new BIT even if they are accepted by other countries.
The problem arose when, after the CAG estimated the A Raja scam at Rs 1.76 lakh crore, it applied the same logic to Antrix-Devas since this was also spectrum. As compared to the pittance Devas was paying, the 2010 auctions fetched Rs 642 crore per Mhz for the BWA spectrum and Rs 3,340 crore for 3G spectrum. Based on this, it could be argued – though CAG did not estimate a loss as it did in the Raja case – that the ‘losses’ ranged from Rs 45,000 crore to Rs 235,000 crore, depending upon whether you use the BWA or the 3G spectrum as the comparator. Unnerved by the CAG draft, the government set up two committees which recommended scrapping the deal.
This, as FE had argued earlier, was incorrect since telecom and satellite spectrum are very different – since the former can be reused several times, the number of customers it can service are at least 800-900 times as many customers. Besides, as ISRO’s then chief G Madhavan Nair had pointed out when the deal was being attacked, the deal did not extend to terrestrial or telecom spectrum – if Devas was to offer telecom services, he argued, the government would have asked it to pay the necessary license fees and bid for spectrum. As to the issue of the government not being asked for approval before the deal was signed, Nair had pointed to ISRO’s powers being sufficient to permit this – when TataSky was leased 12 transponders, he said, the government was not asked about this, much less permission being sought.
|Last Updated ( Wednesday, 27 July 2016 06:02 )|