PCA CASE NO. 2013-09 IN THE MATTER OF AN …

1 PCA CASE NO. 2013-09 IN THE MATTER OF AN ARBITRATION ARISING UNDER THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF MAURITIUS AND THE GOVERNMENT OF THE REPUBLIC OF india FOR THE PROMOTION AND PROTECTION OF INVESTMENTS ENTERING INTO FORCE JUNE 20, 2000 AND THE ARBITRATION RULES OF THE UNITED NATIONS commission ON INTERNATIONAL TRADE LAW 1976 _____ -between- CC/DEVAS (MAURITIUS) LTD., DEVAS EMPLOYEES MAURITIUS PRIVATE LIMITED., and TELCOM DEVAS MAURITIUS LIMITED. (the Claimants ) -and- THE REPUBLIC OF india (the Respondent, and together with the Claimants, the Parties ) _____ AWARD ON JURISDICTION AND MERITS July 25, 2016 _____ Arbitral Tribunal The Hon. Marc Lalonde, , , (Presiding Arbitrator) Mr. David R. Haigh, The Hon. Shri Justice Anil Dev Singh PCA 159163 PCA Case No.

2 2013-09 Award on Jurisdiction and Merits Page i of xi TABLE OF CONTENTS INTRODUCTION .. 1 A. THE PARTIES .. 1 B. THE DISPUTE .. 1 PROCEDURAL HISTORY .. 2 A. COMMENCEMENT OF THIS ARBITRATION .. 2 B. CONSTITUTION OF THE ARBITRAL 2 C. ADOPTION OF THE TERMS OF APPOINTMENT AND THE FIRST PROCEDURAL MEETING .. 3 D. CHALLENGES TO THE APPOINTMENT OF ARBITRATORS .. 4 E. THE PARTIES WRITTEN SUBMISSIONS .. 5 F. THE PARTIES REQUESTS FOR THE PRODUCTION OF DOCUMENTS .. 5 G. HEARING ON JURISDICTION AND LIABILITY .. 6 H. THE NEW DOCUMENTS PRODUCED BY THE RESPONDENT ON DECEMBER 20, 2014 .. 8 I. THE LAUNCHING OF GSAT-6 .. 9 J. THE ICC FINAL AWARD IN DEVAS MULTIMEDIA PRIVATE LIMITED V. ANTRIX CORPORATION LIMITED .. 10 FACTUAL BACKGROUND .. 10 A. THE KEY ACTORS - CORPORATE AND STATE ENTITIES AND ORGANS OF THE STATE .. 11 B.

3 BACKGROUND TO THE DEVAS PROJECT .. 15 1. The S-band and Its Allocation within india .. 15 2. The Proposed Devas Satellite-Terrestrial Communications System .. 16 3. Negotiations Leading to the Devas Agreement .. 18 C. THE DEVAS 19 1. Leased Capacity .. 19 2. Upfront Capacity Reservation Fees .. 20 3. Regulatory Approvals .. 21 4. Delay Damages .. 21 5. Termination .. 22 6. Force Majeure .. 25 D. THE INITIAL DEVELOPMENT OF THE DEVAS PROJECT .. 26 1. Establishment of Corporate Infrastructure and Initial Financing .. 26 2. Delays to the Delivery of 27 E. THE PARALLEL REVIEW PROCESS OF THE DEVAS AGREEMENT AND ITS SUBSEQUENT ANNULMENT .. 29 1. india s Internal Discussions on Security Needs for S-band Capacity .. 29 2. The Suresh Report .. 30 3. The Space commission s Determination to Annul the Devas Agreement.

4 32 4. The Opinion of the Additional Solicitor-General .. 35 5. DOS Note for the CCS and the CCS Decision to Annul the Devas Agreement .. 37 F. THE PERIOD FOLLOWING THE ANNULMENT OF THE DEVAS AGREEMENT .. 40 PCA 159163 PCA Case No. 2013-09 Award on Jurisdiction and Merits Page ii of xi 1. Initial Reactions of Devas and Antrix to the Annulment of the Devas Agreement .. 40 2. The Satellites .. 41 3. Related Arbitration Proceedings .. 42 REQUESTS FOR RELIEF .. 43 THE MEANING OF INVESTMENT FOR THE PURPOSES OF THE TREATY .. 44 A. THE PARTIES ARGUMENTS .. 44 1. The Respondent s Position .. 45 2. The Claimants Position .. 49 B. THE TRIBUNAL S ANALYSIS .. 52 1. The Devas Agreement .. 52 2. Investment Under the Treaty .. 52 THE ESSENTIAL SECURITY INTERESTS PROVISION .. 56 A. INTERPRETATION OF ARTICLE 11(3) OF THE TREATY IN CONTEXT.

5 56 1. What Constitutes Essential Security Interests ? .. 56 a. Can Essential Security Interests Be Construed as a MATTER of Self-judgment by the Respondent? .. 56 i. The Respondent s Position .. 56 ii. The Claimants Position .. 57 iii. The Tribunal s Analysis .. 58 b. What Conditions Must the Respondent Meet to Show that its Measures Were Directed to the Protection of its Essential Security Interests ? .. 59 i. The Respondent s Position .. 59 ii. The Claimants Position .. 60 iii. The Tribunal s Analysis .. 62 2. Does Article 11(1) of the Treaty Allow for the Introduction of Customary International Law Restrictions Imposed on a State of Necessity Defence?.. 66 a. The Claimants 66 b. The Respondent s Position .. 67 c. The Tribunal s 68 3. Can the Claimants Invoke Article 11(4) of the Treaty? .. 69 a.

6 The Claimants 69 b. The Respondent s Position .. 70 c. The Tribunal s 72 4. Does Article 11(3) Prevent Entitlement to Compensation? .. 78 a. The Claimants 78 b. The Respondent s Position .. 78 c. The Tribunal s 79 B. APPLICATION OF THE LAW TO THE FACTS .. 79 1. The Parties Arguments .. 80 a. Historical Analysis of Demands for S-band Spectrum in india .. 80 i. The Claimants Position .. 80 ii. The Respondent s Position .. 82 PCA 159163 PCA Case No. 2013-09 Award on Jurisdiction and Merits Page iii of xi b. MSS Demands Versus BSS Demands .. 83 i. The Claimants Position .. 83 ii. The Respondent s Position .. 85 2. The Tribunal s Analysis .. 86 EXPROPRIATION .. 101 A. THE PARTIES ARGUMENTS .. 101 1. The Existence of an Expropriation .. 102 a. The Claimants 102 b. The Respondent s Position .. 103 2.

7 Lawfulness of the Expropriation .. 104 a. Public Purpose .. 104 i. The Claimants Position .. 104 ii. The Respondent s Position .. 106 b. Due Process .. 106 i. The Claimants Position .. 106 ii. The Respondent s Position .. 107 3. Potential Discrimination in the Expropriation .. 108 a. The Claimants 108 b. The Respondent s Position .. 108 4. Fair and Equitable Compensation .. 109 a. The Claimants 109 b. The Respondent s Position .. 109 5. The Pendency of a Breach of Contract Claim .. 110 a. The Claimants 110 b. The Respondent s Position .. 111 B. THE TRIBUNAL S ANALYSIS .. 112 1. The Existence of an Expropriation .. 112 2. The Lawfulness of the 113 a. Public Purpose .. 113 b. Due Process .. 113 c. Potential Discrimination in the Expropriation .. 114 d. Fair and Equitable Compensation .. 114 e. The Pendency of a Breach of Contract Claim.

8 114 3. Conclusion .. 115 FAIR AND EQUITABLE TREATMENT .. 115 A. THE PARTIES ARGUMENTS .. 115 1. The Applicable Standard of Treatment .. 116 a. The Claimants 116 b. The Respondent s Position .. 118 2. The Alleged Violation of the FET Standard .. 121 a. The Claimants 121 b. The Respondent s Position .. 122 B. THE TRIBUNAL S ANALYSIS .. 124 PCA 159163 PCA Case No. 2013-09 Award on Jurisdiction and Merits Page iv of xi UNREASONABLE OR DISCRIMINATORY MEASURES .. 131 A. THE PARTIES ARGUMENTS .. 131 1. The Claimants Position .. 131 2. The Respondent s Position .. 132 B. THE TRIBUNAL S ANALYSIS .. 133 MOST-FAVOURED-NATION TREATMENT .. 134 A. THE PARTIES ARGUMENTS .. 135 1. The Possibility of Importing the Full Legal Protection and Security Clause of the Serbia- india BIT .. 135 a. The Claimants 135 b.

9 The Respondent s Position .. 136 2. The Respondent s Alleged Violation of the Full Legal Protection and Security Provision .. 137 a. The Claimants 137 b. The Respondent s Position .. 138 B. THE TRIBUNAL S ANALYSIS .. 138 DECISIONS .. 139 PCA 159163 PCA Case No. 2013-09 Award on Jurisdiction and Merits Page v of xi LIST OF DEFINED TERMS Antrix Antrix Corporation Ltd, an Indian corporation wholly owned by the Government of india that is under the administrative control of DOS and purports to operate as the commercial marketing arm of ISRO and DOS. Antrix was created to promote the commercial exploitation of india s space program. ASG The Additional Solicitor-General of india , one of the law officers of the Republic of india who represents the Government of india in the Supreme Court and provides it with legal advice.

10 AV Audio-video. Balachandhran Report Report issued by Mr. G. Balachandhran on January 9, 2011. BIT(s) Bilateral investment treaty (or treaties). BSS Broadcast satellite services. BWA Broadband wireless access. CC/Devas CC/Devas (Mauritius) Ltd., the first Claimant, which was formed in 2006 and has its registered office in Port Louis, Mauritius. It is affiliated with Columbia Capital LLC, a venture capital firm based in Alexandria, Virginia. Shareholder of Devas. CCS The Indian Cabinet Committee on Security, a select Cabinet committee that, among other matters, deals with all defence related issues, issues relating to law and order, and internal security and economic and political issues impinging on national security. It is composed of the Prime Minister, the Minister of Home Affairs, the Minister of External Affairs, the Minister of Finance, and the Minister of Defence.