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.
