Pca Case No. 2013-09 in the Matter of an Arbitration
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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, P.C., O.C., Q.C. (Presiding Arbitrator) Mr. David R. Haigh, Q.C. The Hon. Shri Justice Anil Dev Singh PCA 159163 PCA Case No. 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 TRIBUNAL............................................................. 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. 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 AGREEMENT.................................................................................................... 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 Satellites....................................................................................... 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 ....................... 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 .................. 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’ Position..................................................................................................... 66 b. The Respondent’s Position ................................................................................................ 67 c. The Tribunal’s Analysis..................................................................................................... 68 3. Can the Claimants Invoke Article 11(4) of the Treaty? .................................................... 69 a. The Claimants’ Position..................................................................................................... 69 b. The Respondent’s