A recent academic article authored by Prabhash Ranjan, Vice Dean of the Jindal Global Law School in Delhi, astutely observes the government’s many missteps in the Devas case, but misses the real lesson – that by demonizing genuine, credible and pioneering foreign investors, and by dishonestly using the country’s judicial and law enforcement powers against them, the Modi government is crippling the international reputation of India as an investment destination for years to come.
In his several articles on the Devas case Professor Ranjan harbors no illusions about the character of Indian government, which has faced a multitude of investor / state arbitrations, “due to its capricious behaviour symptomatic of bad governance.” Professor Ranjan observes that in multiple cases, “India dragged its feet at almost every stage of dispute adjudication” and has raised specious arguments “despite overwhelming evidence proving the contrary.” After India loses such arbitrations, as happens in the majority of cases, “India’s record [of compliance with rulings] is abysmal.”
The Devas case follows this familiar and characteristic pattern. Ranjan writes, the Indian government “hastily annulled this agreement” and “[t]his abrupt annulment triggered several legal disputes internationally. India spent a massive amount of money and resources defending these claims but to no avail. India lost all the cases, both commercial and treaty-based arbitration.” Moreover, as usual, the Indian government has refused to comply with any of the awards.
Yet, like so many others, Professor Ranjan accepts the Modi government’s fraud claims hook, line, and sinker in alleging criminality by Devas. Unbelievably, he writes, “[i]t remains unclear why India did not raise the argument of fraud and corruption before the . . . arbitration tribunals.” This is simply avoiding the obvious: that the allegations against Devas are utterly baseless.
Professor Ranjan does a great disservice to justice and the rule of law by disregarding the facts of the Devas case, even while admitting that “[t]he Devas case is emblematic of bad regulation and poor governance in the country” and that “[t]he country’s global reputation, belief in rule of law and assets of India’s PSUs abroad are all too precious to be sacrificed at the alter of a few million dollars.”
Professor Ranjan uncritically accepts a number of the Modi government’s baseless claims when he writes:
- “India argued that reserving the S-band satellite spectrum for the needs of defence and paramilitary was aimed at protecting its “essential security interest.””
- IN FACT: This is not true. The Indian government scrambled for months to find a plausible justification for its ultimately illegal termination of the Devas contract, and settled on a force majeure argument rather than a “security interest” premise.
The ICC and an UNCITRAL tribunal found there was no genuine force majeure event, which had been concocted to support the alleged “needs” cited by the Indian government. There have been multiple confusing and groundless arguments raised by the India government to wrongfully claim that terminating the contract was legal, in large part to mislead influential analysts like Ranjan. But they have all failed in impartial courts, and the facts tell a clearly different story.
- A “2012 report of the Comptroller and Auditor General (CAG) had found several anomalies in the Devas-Antrix contract, such as the agreement promoting the interest of an individual private entity at the cost of public interest. Prima facie, there was adequate evidence that the incorporation of Devas was done for fraudulent purposes. India neither pleaded the ongoing criminal investigations against Devas before the two tribunals nor did it cite the CAG report.”
- IN FACT: This report, published soon after Devas initiated arbitration against Antrix, appears to have been little more than retaliation against Devas. Indeed, India knew that it could not submit this report to the arbitration tribunal because its assertions are conclusory and unsupported, and would be dismissed under scrutiny. Neither this report, nor any investigations since then have found any wrongdoing by Devas or its shareholders.
- Quoting the Supreme Court decision: “[I]f the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, every part of the plant that grew out of those seeds, such as the agreement, the disputes, arbitral awards, etc., are all infected with the poison of fraud. A product of fraud is in conflict with the public policy of any country including India.”
- IN FACT: The key word here is “if”. No impartial court, in or out of India, has found that Devas engaged in any wrongdoing at all. The merits of India’s bogus fraud allegations, created specifically by India to excuse itself from paying the amounts it owes Devas and its shareholders, were never actually scrutinized by the Supreme Court.
The Indian government had every good reason to embrace the Devas project. The country was on the precipice of losing its S-band satellite frequency allocation due to disuse. Devas was a new customer for India’s growing satellite production and launch capabilities, and the wellbeing and prosperity of India’s people would undoubtedly benefit from the implementation of Devas’ ground-breaking services. The Devas project was endorsed by multiple evaluations conducted within the Indian government.
The foreign investors supporting Devas could not have been more ideal: proven technological innovators in satellite telecommunications, distinguished senior executives of major US telecommunications companies, specialist venture capital firms with partners including a prominent US senator, and Germany’s government-backed telecommunications company, the largest in Europe. The Devas investors accordingly developed their technology as promised, conducted successful demonstrations, made advance payments to India’s space agencies and met all other requirements of the commercial contract. India, however, failed to fulfill repeatedly extended deadlines for the construction and launch of the satellites that Devas would lease.
The Indian government’s belated, implausible, blatantly contrived and self-serving efforts to discredit Devas are now heading for new arbitration, as Professor Ranjan observes. India is also attempting to utilize its allegations to evade enforcement in The Netherlands, the United States, Canada and the U.K. The outcome of these proceedings, especially in common law jurisdictions where factual disclosure is mandatory, will almost certainly discredit the entire Indian judiciary and government rather than Devas.
When a prominent legal authority like Professor Ranjan effectively endorses and condones the Modi government’s “mind boggling” behavior against Devas (in the words of a Canadian judge), potential investors are on notice that there are no limits to the risks of operating in India.