Is Devas Ruling A Pyrrhic Win?

Delhi HC nixing arbitration award helps but questions will persist on India's approach to investment treaties

- Rajat Malhotra

The Delhi high court set aside the International Chamber of Commerce (ICC) arbitration award in favour of Devas Multimedia on August 29. The court found the arbitral award untenable on various grounds. This was however a forgone conclusion considering the Supreme Court had already found the underlying transaction between Antrix Corporation, the commercial arm of Isro, and Devas Multimedia to be borne from fraud.

While the outcome of the challenge to the arbitral award may have been foreseen, the impact it will have on India's defence to the various seizure proceedings initiated by Devas and its shareholders around the world will be substantial.

The next phase: Seizure proceedings were initiated by Devas Multimedia on the basis of the now set aside ICC award. Therefore, the orders of attachment by foreign courts must also ordinarily be vacated. However, the seizure proceedings in enforcement of two Bilateral Investment Treaty (BIT) awards may not suffer the same fate.

A BIT is a reciprocal sovereign to-sovereign guarantee that protects investors and investments of one country in the territory of the other. But they would most certainly be imperilled as the arbitral award in favour of Devas Multimedia has itself been found to be untenable. This is the shot in the arm that GoI needed in its fight against Devas and its shareholders.