India has lost a major case at an international tribunal at The Hague and now faces the possibility of paying a financial compensation of up to $1bn (£763m). The case was brought by a Bengaluru-based telecom firm, Devas Multimedia against the state-run Indian Space Research Organisation (Isro).
Isro's commercial arm, Antrix, entered into a telecommunications contract with Devas in 2005 but had to annul the deal in 2011 after controversy erupted over conflict of interest and financial irregularities. The deal was that Devas could use the valuable S-band satellite spectrum for up to 12 years by leasing space on two of Isro's satellites at the cost of a little over $30m.
However, the Permanent Court of Arbitration (PCA) struck hard on the Indian state agency saying the government acted "unfairly" and "inequitably". The court added that the "tribunal also found that India breached its treaty commitments to accord fair and equitable treatment to Devas's foreign investors". In the arbitration filed against Antrix, Devas claimed $1.6bn in damages.
The PCA has technically upheld the earlier verdict of the International Court of Arbitration (ICA), which also ruled in favour of Devas in September 2015. The PCA had slapped a fine on Isro's commercial arm of about $672m at that time. The latest verdict is likely to dent the image of India as a friendly destination for foreign direct investment.
While Isro is yet to officially react to the outcome, Devas has responded by welcoming the decision. The company's chairman Lawrence Babbio said in a press statement: "Devas committed to partner with Antrix on a hybrid satellite-terrestrial infrastructure project to bring nationwide satellite/terrestrial broadband wireless access and audio visual services to India. With today's PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas's rights."
"Other courts in France and the United Kingdom have agreed that the award against Antrix ought to be enforced. We prefer a mutually agreeable resolution of this matter. But until that occurs, Devas and its investors will continue to press their claims before international tribunals and in courts around the world."