The United States Supreme Court has held that a USD 1.29 billion arbitral award enforcement suit filed by Mauritius-based CC/Devas and India-based Devas Multimedia (plaintiffs) against India’s Antrix Corporation can be proceeded in the US courts without the plaintiffs having to show that Antrix had ‘minimum contacts’ with the United States.
The verdict set aside a 2023 judgment delivered by the Ninth Circuit Court of Appeals, which dismissed the suit on the ground that Antrix, a company owned by the Indian government, lacked sufficient connections to the US to support personal jurisdiction under the Foreign Sovereign Immunities Act (FSIA), which governed suits against foreign states and their instrumentalities in US courts.
Authoring the verdict, Justice Samuel Alito said that personal jurisdiction existed under the FSIA when an immunity exception applied and service was proper. Since the Ninth Circuit required more, the verdict has been revised and the suit remanded for further proceedings, he added.
Under the FSIA, the ‘direct effect’ standard lifts sovereign immunity where a foreign state’s commercial activity causes a direct impact in the United States.
Courts interpret ‘direct effect’ as an immediate consequence of the act, without intervening factors. The conduct need not occur in the US, but the result, like unpaid dues to a US bank, must be tangible and foreseeable. This serves as a jurisdictional safeguard linking foreign conduct to the US courts.
In 2005, Antrix Corporation Limited, the commercial arm of the Indian Space Research Organisation (ISRO), had entered into a deal with Devas Multimedia Private Limited, a Bengaluru-based company. Under the agreement, Antrix was to lease transponders on two ISRO satellites to Devas, enabling it to offer satellite-based multimedia services across India using the S-band spectrum.
In 2011, the Indian government unilaterally cancelled the agreement, citing national security concerns and the need to reserve S-band spectrum for strategic purposes. This abrupt termination led Devas to initiate arbitration proceedings before the International Chamber of Commerce (ICC), alleging wrongful repudiation of the contract.
In 2015, the ICC tribunal awarded Devas USD 562.5 million in damages. Separately, foreign investors in Devas initiated claims under bilateral investment treaties (BITs) against India, resulting in additional arbitration awards in their favour.
Antrix and the Indian government, however, maintained that the deal was tainted by fraud from the outset. In 2021, the National Company Law Tribunal (NCLT) ordered the liquidation of Devas, calling it a sham entity. The decision was upheld by the Supreme Court of India in 2022, which ruled that Devas was incorporated for a fraudulent purpose and had manipulated public resources.
In 2022, the Delhi High Court set aside the ICC award on the grounds of patent illegality, fraud and conflict with the public policy of India. The High Court ruled that the Devas-Antrix deal was entered into with a ‘fraudulent intention,’ noting that allowing enforcement of the award would ‘encourage fraud,’ something that the Indian legal system could not countenance. The decision was later upheld by the Supreme Court of India.
Devas sought enforcement of the ICC award in multiple jurisdictions, including the US. While the District Court confirmed the award, the Ninth Circuit Court reversed it on jurisdictional grounds.
The US Supreme Court held that FSIA’s text made it clear that once an immunity exception applied and service had been effected in accordance with the Act, personal jurisdiction did exist.
It declined to read an additional due process requirement into the relevant clause of the FSIA. Since any reference to ‘minimum contacts’ was notably absent from the provision, the Court declined to add what Congress left out.
Noting that FSIA was enacted to provide a comprehensive and predictable framework for suing foreign states in the US, replacing the earlier regime that depended on case-by-case executive discretion, Justice Alito said imposing an additional constitutional test would contradict Congress’s carefully structured statutory scheme.
The US Supreme Court further noted that FSIA’s immunity exceptions themselves required a sufficient nexus with the United States, for example in the case of commercial activity or direct effects, adding that these built-in requirements already addressed due process concerns.
The US Supreme Court, however, did not rule on Antrix’s alternative defenses, including the impact of the Indian court’s setting aside the award or whether the case should be dismissed on grounds such as forum non conveniens. It left these issues to be examined by the Ninth Circuit Court.
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