ICC Arbitral Award set aside by Delhi High Court, Upheld

Posted on 18 March, 2023 by Adv Amogh

Abstract : A division bench of the Delhi High Court on Friday upheld a single-judge order setting aside the arbitral award which had directed Antrix Corporation Limited (commercial arm of ISRO) to pay damages of over US$ 560 million along with interest to Devas Multimedia Private Limited.

In its judgement, the division bench said that the act of fraud is an anathema to all equitable principles and every transaction tainted with fraud must be viewed with disdain by courts.

"In the instant case, the Supreme Court in the Civil Appeal No.5766/2021 has held that the commercial relationship between Devas and Antrix is a product of fraud, and as a consequence, the Devas Agreement, the ICC Award, and all other disputes arising out of the transaction would be tainted by fraud. Permitting Devas and its shareholders to reap the benefits of the ICC Award would amount to this Court perpetuating the fraud. Such a view would be against all principles of justice, equity and good conscience," the Court stated.

Background : 

On September 14, 2015 the International Chamber of Commerce (ICC) had, in its arbitral award, directed Antrix to pay damages to Devas.

However, the award was set aside by single-judge Justice Sanjeev Sachdeva on the grounds that it suffered from patent illegalities and fraud and was in conflict with the public policy of India.

Devas is a Bengaluru-based start-up owned by Mauritian and US firms. It was stated to be established by two people, one being a former employee of ISRO, with a share capital of ₹1,00,000 to pursue digital multimedia services.

Dispute : 

Antrix and Devas entered into an agreement by which Antrix agreed to build, operate, and launch two satellites and lease spectrum capacity on those satellites to Devas. Devas had to utilise this bandwidth to provide multimedia services across India.

However, the agreement was terminated by Antrix in 2011 due to changes in policy decisions. A legal battle between the parties ensued. On September 14, 2014, the ICC rendered an award in favour of Devas.

Antrix argued that the contract from which the arbitral award arose was wholly vitiated due to acts of corruption, fraud and criminality committed by the erstwhile management of Antrix and Devas.

On a petition filed by Antrix, the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) had ordered the winding up of Devas on grounds of fraud. Devas challenged the NCLAT judgment before the Supreme Court which, on January 17 last year, upheld the said judgment declaring that Devas was formed for fraudulent and unlawful purposes.