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In a significant legal victory for India, an Australian appeals court has ruled that the country is not liable for a $112 million arbitral award in a dispute over a cancelled communications services deal. The court sided with India's sovereign immunity defense, effectively blocking the enforcement of the award.

Sovereign Immunity Prevails

On Friday, the Federal Court of Australia overturned a 2023 ruling that had dismissed India's claim to immunity. The court determined that the dispute, rooted in a terminated agreement between India and Devas Multimedia, falls outside the scope of the New York Convention—a treaty that typically binds countries to arbitral awards. India’s reservation to the convention, which limits its obligations to commercial disputes, proved pivotal in the decision.

The judges ruled that the arbitration, launched under a bilateral investment treaty, didn’t originate from a commercial relationship as defined by Indian law. Instead, it fell under the realm of public international law. The court’s opinion stated, “By its reservation, India made it plain that it did not and would not treat differences arising from legal relationships that are not commercial as being subject to the convention.”

The Devas Multimedia Dispute: A Global Battle

The dispute traces back to 2011 when the Indian government unexpectedly terminated its lease deal with Devas Multimedia, a company aiming to provide broadband services via satellite. The deal involved valuable electromagnetic spectrum, known as the S-band, which the government had awarded to Devas. Critics later alleged that the deal had been improperly handled, leading to media backlash and the eventual unraveling of the agreement.

As a result, investors in Devas Multimedia—CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Ltd., and Telecom Devas Mauritius Ltd.—were awarded $112 million by an international tribunal based in The Hague. This latest case in Australia involves the Delaware-based parent companies of the Devas shareholders: CCDM Holdings LLC, Devas Employees Fund US LLC, and Telecom Devas LLC.

Billion-Dollar Saga of the Devas Multimedia Deal

The Australian court ruling is the latest chapter in the long-running Devas saga, which has also resulted in a separate $1.3 billion arbitral award against Antrix Corp. Ltd., the commercial arm of India’s space agency. That award, issued in 2015 by the International Chamber of Commerce (ICC), has been the subject of enforcement battles in multiple countries, including the United States. Currently, the U.S. Supreme Court is considering whether to enforce the award after the Ninth Circuit Court of Appeals declined to do so in 2023.

Legal Representation and Global Reach

In this latest legal battle, India’s defense was led by Fiona Roughley SC of Banco Chambers and Celia Winnett of Sixth Floor Selborne Wentworth Chambers, with White & Case LLP handling the case. Representing the investors, CCDM Holdings LLC, and the related parties were top legal experts including Bret Walker SC and Justin Hogan-Doran SC.

The decision by the Federal Court is seen as a substantial setback for the investors, who had hoped to enforce the arbitral award following the termination of the Devas Multimedia deal. With appeals still ongoing in other jurisdictions, the battle is far from over.