US Supreme Court Rules $1.29 Bn Lawsuit Against ISRO-Owned Antrix to Proceed
New Delhi: The United States Supreme Court has ruled that a USD 1.29 billion arbitral award enforcement suit filed by Mauritius-based CC/Devas and India-based Devas Multimedia against the Indian state-owned firm Antrix Corporation can proceed in US courts without the plaintiffs (Devas) having to show the “minimum contacts” between Antrix and the United States, Bar and Bench reported.
The two companies have been entangled in a failed satellite deal.
The decision effectively reverses the 2023 judgment of the Ninth Circuit Court of Appeals that stated that foreign investors in Devas Multimedia cannot pursue confirmation of the USD 1.29 billion compensation in the US as Antrix lacked sufficient business connections to the US to support personal jurisdiction under the Foreign Sovereign Immunities Act (FSIA).
“Personal jurisdiction exists under the FSIA when an immunity exception applies and service is proper. The FSIA does not require proof of “minimum contacts” over and above the contacts already required by the Act’s enumerated exceptions to foreign sovereign immunity,” the US Supreme Court held.
“Because the Ninth Circuit required more, we reverse the judgment below and remand the suit for further proceedings,” it further stated, as quoted by Bar and Bench.
Antrix, the commercial arm of the Indian Space Research Organisation (ISRO), had entered into a deal with Bengaluru-based Devas Multimedia Pvt. Ltd in 2005 where it was to lease transponders on two ISRO satellites to Devas, for satellite-based multimedia services across India using the S-band spectrum. However, in 2011, the Indian government unilaterally cancelled the deal citing “national security” concerns.
Devas had then initiated arbitration proceedings before the International Chamber of Commerce (ICC), alleging wrongful repudiation of contract, and in 2015, the ICC tribunal awarded Devas USD 562.5 million in damages.
However, Antrix and the Union government reportedly maintained that the deal was tainted by fraud from the outset. In 2021, the National Company Law Tribunal (NCLT) ordered the liquidation of Devas, calling it a sham entity. The Supreme Court of India upheld this decision in 2022.
The same year, the Delhi high court set aside the ICC award to Devas on grounds that the deal was "entered into with a fraudulent intention", had patent illegality and conflicted with the public policy of India.
On August 1, 2023, the US Court of Appeals order came as a major relief for Antrix and the Indian government.
On May 6, 2024, the foreign investors in Devas approached the US Supreme Court, against a refusal by the US Court of Appeals for the Ninth Circuit to revisit its own 2023 order.
Earlier this year, Antrix had in a brief document asked the US Supreme Court to confirm a 2023 order of the US Court of Appeals.
The US Supreme Court has now disagreed. It held that as per the FSIA’s text, once an immunity exception applies and service has been effected, personal jurisdiction “shall exist.”
“Under the Foreign Sovereign Immunities Act of 1976 (FSIA), “[p]ersonal jurisdiction over a foreign state shall exist” whenever (1) an immunity exception applies, and (2) the foreign defendant has been properly served,” it stated.
“The Ninth Circuit’s two contrary arguments cannot override the plain meaning of the FSIA’s personal-jurisdiction provision,” it further added.
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