India has lost a major satellite arbitration case in The Hague and is likely to have to face up to $1 billion (€0.9bn) in penalties and costs.

The International Tribunal’s Permanent Court of Arbitration in The Hague has given a unanimous verdict against the government of India in a case filed by telco Devas Multimedia. The contract was cancelled in 2005 by Antrix, which is the commercial arm of the state-run Indian Space and Research Organisation (ISRO).

Devas had filed its case at the international court of arbitration in 2015. Antrix had agreed to lease long-term two satellites operating in the S-band spectrum but the contract was cancelled in 2011.  The government at the time said that it had not signed off on ISRO’s plans to build the satellites.

The tribunal has noted that in doing so, the government acted unfairly, causing huge losses to investors in Devas Multimedia.  Madhavan Nair, who headed ISRO when the Devas deal was signed, was blacklisted for any government role and investigated for charges of corruption. He now says the lost case is the result of thoughtless action and hasty reaction by India’s government.

In an earlier decision, an International Chamber of Commerce (ICC) tribunal in 2015 found unanimously that Antrix’s repudiation of the Devas-Antrix contract was  unlawful, and awarded Devas damages and pre-award interest of approximately $672 million, plus post-award annual interest accruing at 18 percent until the award is paid in full. Courts in the United Kingdom and France have recognized the ICC award and held that it is enforceable.

India’s government says it is “examining” the ruling. “The award of the tribunal is being examined and legal recourse, as deemed fit, will be taken,” the Indian Space Research Organisation said in a release. ISRO also noted that the limited liability of compensation shall be 40 per cent of the value of investment. “The precise quantum has not been determined as yet,” it added.

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